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January-July remittance income plummets 50%
- July remittance income at US$ 279.5mn. slightly up from June, but down from US$ 453.3 mn a year ago
- Cumulative figure for the seven-month period down 50% YoY to US$ 1.8bn
- Stubbornly low remittances question the validity of path taken by authorities to restore such incomes
- Analysts say while offering incentives, authorities should try to plug the trust deficit between people and rulers to restore remittances.
Despite various incentive schemes introduced by the authorities to attract more worker remittances to the country
via formal channels, such incomes continue to fall, triggering questions about the validity of the path taken to restore remittances income to the country.
In the month of July, Sri Lankan migrant workers sent in just US$ 279.5 million to their loved ones via official channels compared to US$ 453.3 million recorded for the same month in 2021 and US$ 274.1 million in June 2022.
The cumulative seven-month remittance income fell by 50 percent year-on-year to US$ 1889.4 million.
The Central Bank and the authorities have taken measures to crackdown on informal channels such as undiyal and hawala to boost the remittance income via official channels.
Despite such crackdowns, migrant Lankan workers seem to prefer unofficial channels to send back their moneys home largely due to the parallel interest rates offered by these channels, which are always higher than the official
exchange rate.
However, unlike earlier, there is no massive difference between the official exchange rate and the parallel interest rates following the sharp devaluation of the rupee against the US dollar.
A couple of weeks ago, the Cabinet of Ministers decided to offer a host of additional benefits to migrant workers who use official channels to repatriate their moneys, including increased duty-free allowances and permits to import electric vehicles.
It is yet to see how these incentives will encourage migrant workers to send back more moneys via official channels.
However, according to analysts, the key reason for the Lankan migrant workers not to send much money back to the country could be the trust deficit between the Sri Lankan people and the ruling class of the country.
Social media posts by some migrant workers reflect their unwillingness to send moneys to Sri Lanka because of the widely-perceived corruption of the country’s ruling class.
Some analysts believe that until that trust deficit is plugged, Sri Lanka may not see remittance incomes that it used to see a couple of years ago.
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