Worker remittances, only bright spot in economy, advance further in May

• SL receives US$ 460mn as remittances, up 6.6% YoY
• Cumulative remittances in first five months now at US$ 2.84bn, up 18%
• SL targets US$ 8bn from migrants workers this year

The remittance income from Sri Lankans working abroad has continued to plough ahead amid the brewing economic crisis at home as global economies are advancing with the ease of virus restrictions.

Sri Lanka received US$ 460.1 million in remittance income in May 2021, up 6.6 percent from US$ 431.8 million in May 2020 when the current climb first began a year ago, making it the long increase on record. 

With the May 2021 receipts, Sri Lanka on a cumulative basis has collected US$ 2,845.9 million in remittance incomes during the first five months, up by robust 18.2 percent. 

While remittance inflows remain the only bright spot in Sri Lanka’s external sector when every other thing losing their momentum, including merchandise export earnings, the Central Bank remains watchful of possible disruptions from the current virus resurgence and would review the projection if the circumstances demand, as indicated a few weeks ago.

As authorities grew more optimistic over the pace of the remittances during the recent past, the Central Bank early this year, upgraded the remittance income target for 2021 to US$ 8.0 billion. 

Worker remittances to Sri Lanka grew by 5.8 percent in 2020 to US$ 7.1 billion, reaching a four-year high.
Despite the record low departures since the virus outbreak last year, remittance incomes have been surprisingly held up as migrants send more money to support their families and friends at home while they increasingly use formal banking channels to route their money, in a deviation from using informal channels for money transfers as their operations got disrupted due to the pandemic.

As Sri Lanka is increasingly running short of options to boost its foreign income earnings and upcoming foreign debt repayments, the country again is leaning towards bilateral and multilateral borrowings to keep its external sector and the real sector afloat rolling over its existing debt. 

Sri Lanka lost over US$ 4.5 billion in foreign exchange income from tourism trade, which remains in limbo for over a year now due to virus restrictions. 

During the first five months, earnings from tourism were a paltry US$ 20.6 million as re-opening of the borders this January failed to draw visitors while fresh restrictions imposed from the third week of April dimmed expectations further.