Remittances reach seasonal high of US$ 572mn in March

• January - March remittances total US$ 1.53 bn

Sri Lankans working abroad typically send the highest amount of money back home in March, ahead of the Sinhala and Tamil New Year, and this time it has reached US$ 572.4 million.
This was higher from both US$ 568.3 million a year ago and US$ 476.2 million a month earlier, data from Central Bank showed.

Remittances followed by tourism inflows together account for roughly US$ 12.5 billion in a typical year and such inflows more than offset the deficit in the trade account of the Balance of Payment.
Remittances which grew stronger during initial days of the pandemic due to the near absence of the informal channels started to weaken from the middle of 2021 due to the higher premiums offered by the informal money exchangers such as Undiyal and Hawala.

Disinformation campaigns carried out by certain factions with vested interests too partly helped to slow the key inflow to the country as migrant Sri Lankans were made to believe that the political authority at the time was misappropriating the dollars they sent back home.
Sri Lanka could restore its former level of remittances which fell due to the sharp devaluation of the rupee back in March 2022. The record high number of people who left the country for foreign employment after two years of pandemic has in fact reversed migrant flows.

With March inflows, in the first three months Sri Lanka has received US$ 1,536.1 million from remittances, which was an increase of 8.7 percent from the same period in 2023.
Sri Lanka has always depended on the heavy inflows from remittances to partly close its wide trade deficit and also to de-risk its external sector broadly.

But, the ability to do so weakened in the lead up to the 2022 economic crisis as remittances could not keep up with their annual average while tourism, the third largest foreign inflow, nearly decimated.
Sri Lanka then on the advice of the International Monetary Fund (IMF), raised both interest rates and taxes to fix the budget as they said when you fix the budget you can fix the Balance of Payment.