Remittances income up 11.4% in January

Earnings from remittances from Sri Lankan migrants rose by 11.4 percent in January 2024 to US$ 487.6 million, continuing the months-long increase in the country’s largest foreign exchange inflow.

While this was a decline from the US$ 569.7 million received in December last year, this is far from a concern as December and March typically stand out as high remittance income months due to cultural and seasonal festivities.
Therefore the remittances have largely normalised to its pre-crisis levels of around US$ 500 a month.

At the current level, Sri Lanka could generate roughly between US$ 6.0 billion to US$ 7.0 billion from the money repatriated by the migrants, about the same levels the country had been receiving through 2020 before it started coming down from 2021 onwards due to several reasons.

In 2023, Sri Lanka received US$ 5,969.6 million in total remittances, the highest since 2020.
This is because the Central Bank clamped down on informal money changers who were offering significant premiums to that of what the banks offered and the sharp devaluation of the rupee in 2022 drew back many remitters who otherwise sent their money via informal channels.

Sri Lankans working abroad started skirting the official banking channels to send their money back home from around the middle of 2021 after they learned that they could change their foreign currency at higher premiums from informal channels such as Undiyal and Hawala, as the Central Bank had fixed the rupee at around Rs.200 to a dollar.

Politically motivated misinformation campaigns at the time also prevented another substantial segment of migrants from sending their money back into the country.
These developments and the nearly decimated tourism industry due to the pandemic exacerbated the country’s foreign exchange shortages precipitating into the following year’s economic crisis which compounded into an all-out political crisis and a social disorder.  

It however now appears that remittances have returned to their pre-crisis and pre-pandemic era strength providing the country’s reserves and the Balance of Payment the much needed heft it once provided, helping among other things to come out of the economic crisis.