Worker remittance income plunges to new low in December

• Despite various concessions offered, Dec. remittance income down 60%
• Full-year remittance income down 23% or US $ 1.6bn to US $ 5.5bn

In contrast to the repeated claims made by the authorities, worker remittances income plummeted as much as 60 percent from the same month last year, extending the declining streak for the eighth consecutive month. 
According to the latest data, the Sri Lankan migrant workers repatriated earnings worth of US $ 325.2 million during December 2021, 

compared to a US $ 812.7 million in the same month in 2020. December is typically an outlier as migrant workers send more money back home during the festive month to their friends and families to celebrate Christmas and New Year. 

But December 2021 turned out to be a dim one, as migrants continued to either use unofficial money exchangers to channel their earnings for higher conversion rates or some altogether cut back on what they typically send back home, as the new rules on foreign exchange conversions spooked them. 

What is also surprising is the fact that the poor December remittance income came amid various incentive and regulatory actions taken by the Central Bank to woo back migrants to use formal banking channels and to rein in on informal money changers. 

For instance, the Central Bank offered an additional Rs.8.00 for a United States dollar or equivalent in any other currency in addition to an already paid Rs.2.00 extra from the beginning of December, while it sent ultimatums to errant money changers, warning them of suspension or revocation of their permits, unless they comply with the relevant directions. The government also promised pensions and insurance schemes for those who continuously send moneys via formal banking channels. 

But none of that appeared to have worked. In November, migrant workers sent US $ 271.4 million in earnings, which was 55.6 percent lower compared to November 2020. December marked the third consecutive month, where the year-on-year slump in remittance income hit 50 percent or more. 

With the December remittances, Sri Lanka received a cumulative remittance income of US $ 5,491.5 million for the year 2021, compared to US $ 7,103.9 million received in 2020, logging a 22.7 percent contraction. In absolute terms, Sri Lanka lost a massive US $ 1,612.4 million from worker remittances, due to the parallel exchange rates created from around mid-2021, with the beginning of the current foreign exchange troubles and the fear psychosis created in the minds of the migrant workers, owing to the cases of forcible conversions of their hard-earned moneys. 

However, the Central Bank categorically said worker remittances were not subject to the mandatory foreign exchange conversion rules and migrant workers could keep their earnings in any foreign currency as they prefer, until they decide to convert such into rupees.