Govt. to introduce special incentive package to migrant workers to restore remittance inflows

With the aim of restoring monthly workers’ remittance inflows to US$ 500 million, the government is working on introducing a special incentive package to encourage migrant workers to remit their hard-earned foreign currency earnings through official channels.

Addressing the weekly Cabinet media briefing yesterday, Cabinet Co-Spokesperson and Minister of Labour and Foreign Employment Manusha Nanayakkara revealed that discussion are on-going to provide a range of incentives to Sri Lanka’s migrant workers including tax deductions, duty relief, interest-free or low-interest housing loans and discount vouchers to encourage them to use official channels when remitting funds back to the country.

He said he believes the proposed incentive package would lure migrant workers to remit their earnings through official channels.

According to the Central Bank, the country’s worker remittance inflows declined to 52 percent year-on-year (YoY) to US$ 249 million in April, while the cumulative inflows fell by 57 percent YoY to around one billion in the first four months of the year.

Nanayakkara expects the proposed incentive package will boost monthly workers’ remittance inflows to a minimum of US$ 500 million, which would assist the country to resolve some of the critical issues such as meeting forex requirements in financing fuel imports and essential goods.

However, Nanayakkara acknowledged that it would be a challenging task to convince the migrant workers as well as other Sri Lankans living abroad to remit their funds through official channels.

Following Central Bank’s decision to hold the rupee/dollar exchange rate at Rs.200 last year, workers’ remittances more than halved from the US$ 600-700 million inflows recorded per month.

Despite floating of the rupee, remittance inflows are yet to bounce back to previous levels as migrant workers continue to prefer unofficial channels over banking channels though the rates offered between official and unofficial channels have sharply narrowed.