New incentives for foreign remittances stopped after rupee devaluation
Confusion amongst the public over the hurried increase of an incentive payment for foreign remittances by the Cabinet of Ministers within 24 hours after the Central Bank’s decision to allow the exchange rate flexible, has now been cleared.
The Cabinet has taken a decision to increase the percent incentive payment for Sri Lankan workers sending money from overseas to Rs. 38 per dollar from the existing incentive of Rs 10 per dollar, Cabinet spokesman Minister Dulles Alahapperuma has said last week.
The Finance Ministry issued a statement on the same day announcing that it has decided to pay an incentive of Rs. 20 for every US dollar sent to Sri Lanka by migrant workers in view of the upcoming Sinhala and
Tamil New Year.
The announcement further states that this will not only provide security for foreign workers but also higher benefits for their remittances.
Clarifying the present status, Central Bank Governor Ajith Nivard Cabraal this week told the Business Times “those decisions on the incentive allowance were taken at a time before the rupee was allowed to be flexible by the Central Bank”.
“Since the rupee is now flexible and market driven, the need for a special incentive does not arise, and the Cabinet has now decided not to provide any further incentives for workers’ remittances,” he added.
A senior Finance Ministry official confirmed this decision adding that there was no need to provide incentives to encourage migrant workers to send their money in dollars via formal channels as the rupee value is now fluctuating.
He noted that while the Rs.38 incentive is now not in existence, the Finance Ministry’s grant of Rs. 20 special New Year incentive for foreign remittances will be applicable for the months of March and April.
The Central Bank will issue guidelines to the banks on the payment of this incentive shortly, he said adding that allowing the rupee to be flexible and its value determined by the market would increase the inflow of foreign remittances.
Additional General Manager of International Affairs of the Foreign Employment Bureau Mangala Randeniya stated that the number of people migrating overseas seeking employment has increased, with over 53,000 people having migrated overseas for employment so far this year.
He also stated that according to the Central Bank’s decision (in floating the currency), foreign remittances flowing into the country get a good exchange rate.
The Central Bank will issue guidelines to the banks on the payment of this incentive shortly, he said adding that allowing the rupee to be flexible and its value determined by the market would increase the inflow of foreign remittances.