Worker remittance income declines for fourth consecutive month in Sept.

„Sept. remittance income records 50% decline to US$ 353.2mn

„Cumulative income for nine months falls 10% to US$ 4.57bn

Moneys sent back by Sri Lankans working abroad continued their descent for the fourth consecutive month in September, further widening the gap between the cumulative remittance income received during the nine months in 2020 and 2021.

But the authorities are sanguine that the inflows would start normalising from October as the gap between grey market rates and the official rates are narrowing fast.

According to Central Bank data, Sri Lanka received US$ 353.2 million as remittance income from Sri Lankan migrants in September 2021 compared to US$ 702.7 million in the same month in 2020, logging a decline of nearly 50 percent.

The September remittances were also weaker than the US$ 446.6 million received in August as Sri Lankans working abroad appeared to have either continued to wait till the rupee depreciates further or a sizeable section of money is routed through the informal channels outside the banking sector, where there is considerable gap in the exchange rate.

However, the Central Bank is of the view that with that gap being increasingly narrowed and other measures taken to facilitate direct repatriation of earnings with ease could restore normalcy from the incumbent month onwards.

“Even the (exchange) rate, at which the grey market is operating, has shrunk quite appreciably. We also keep a tab on those numbers carefully and we find that it has dropped quite significantly,” said Central Bank Governor Ajith Nivard Cabraal.

“So, I think this month we would see a change in that situation and going into the future that should change appreciably,” he added referring to October and beyond.

After a study carried out by a working committee comprising of banking sector professionals under the aegis of the Central Bank last week proposed the implementation of a national remittance mobile application called ‘SL - Remit’, with additional services to attract more remittances to Sri Lanka via official channels.

Besides, Cabraal also said they observed a pent-up demand for overseas employment at present, which was held up for more than a year due to the border restrictions caused by the pandemic, which would further assist the remittance inflows in the future.

An estimated 100,000 Sri Lankans seeking foreign employment had to wait before their departures due to the pandemic.

With the September remittances, Sri Lanka had received US$ 4,577.5 million in nine months cumulative remittances in 2021, widening the gap to about 10 percent from what the country received in the same period last year as worker remittances.

Worker remittances are the single largest foreign exchange income earner for Sri Lanka, with around US$ 7.0 billion per annum to the current account of Balance of Payments.

Together with tourism earnings of around US$ 4.5 billion, which Sri Lanka receives in a normal year, has the capacity to more than close the deficit created in the trade account of the Balance of Payment.