Fresh round of incentives from CBSL to up remittances

• Additional Rs.1000 offered to cover transactional cost when remittance made to rupee account
• Additional Rs.10 offered for every US dollar or equivalent foreign currency converted into rupees
• Previous attempts to up remittance with incentives were unsuccessful

The Central Bank of Sri Lanka (CBSL) announced a fresh round of incentives to migrant workers this week, an effort to increase the flow of foreign exchange into the country. 
The financial sector regulator made the announcement via a notice to customers on Thursday (20). 

Sri Lankan migrant workers, who remit their foreign currency earnings to Sri Lanka via banks and other formal channels, will be offered by the CBSL two sets of incentives. 

The first incentive offers migrant workers an additional Rs.1000 to cover the transactional cost when the earnings are remitted to a rupee account. The offer will be effective from February 1, 2022.

The second is the offering of an additional Rs.10 for each US dollar or equivalent foreign currency amount converted to rupees. This will be valid until April 30, 2022. 

The CBSL initiated the incentive scheme for migrant workers in December 2021, to encourage the use of formal channels to send money to the country, so that the economy can maintain the much-needed foreign exchange. 
However, the incentives did not bring out the expected outcome since in December 2021 the foreign remittances underwent a sharp contraction of 60 percent when compared with the corresponding period in 2020. 

The grim outcome, despite several efforts by the CBSL, was due to the migrant workers opting to use unofficial money exchangers to send in their earnings for higher conversion rates, while some refrained from remitting their earnings altogether, due to the new foreign exchange conversion rules.