Worker remittance income dries up further in November

• Nov. remittance income slumps 55% to US $ 271mn
• Cumulative remittance income for 11 months down 18% to US $ 5.1bn
• Nov. and Dec. are generally remittance-heavy months due to year-end festivities 

Contrary to repeated assurances by the authorities, worker remittance income fell further in November, continuing the declining streak for the seventh consecutive month. 

According to the official data released by the Central Bank, Sri Lanka received US $ 271.4 million from migrant workers in November, compared to US $ 611.7 million in the same month, a year ago, which is a 55.6 percent contraction between the two periods. 

Sri Lanka’s year-on-year worker remittance income started declining from June this year, with the start of foreign currency woes, which created parallel exchange rates, drawing a substantial part of such incomes towards informal money changers, who offered much higher conversion rates.

The authorities have employed multiple remedial measures to woo the remitters back into the formal channels and went to the extent of clamping down on informal money changers. 

Sri Lanka is currently offering Rs.10 on top of the official exchange rate per every US dollar sent by migrant workers. 

The effectiveness of this move could only be seen when the remittance income numbers are out for December towards this time in January, next year.  Generally, November and December are remittance-heavy months, in view of the year-end festive season, as migrants send back higher amounts of money to their families back at home than in a typical month. 

But the November slump should be making authorities worry, as they are facing an uphill task of meeting mounting foreign debt obligations starting from next January. 

Fitch Ratings last week downgraded Sri Lanka’s sovereign credit ratings to further junk territory on heightened potential for a debt default in the next few months, given the country’s highly inadequate foreign currency reserves compared to the debt commitments falling due next year. 

The November receipts brought the cumulative 11-month remittance income to US $ 5,166.3 million, compared to US $ 6,291.2 million in the corresponding period in 2020, which is a 17.9 percent decline.