ECONOMYNEXT – Sri Lanka’s remittances coming through official channels gained 13.5 percent to $544.4 million in May 2024 compared to the same month last year, helped by more expatriates using the official banking channels.
The remittances in the first five months were $2,624.4 million, 11.8 percent up from the same period last year, the official data showed.
The remittances have risen continuously after the central bank gave up a parallel exchange rate regime, which compelled most expatriates to switch informal Undiyal and Hawala money transfer methos.
The island nation witnessed a 57 percent jump in remittances coming through formal banking channels to $5.97 billion in 2023, from $3.8 billion a year earlier, helped by elimination of parallel exchange rate.
Sri Lanka’s external sector has now recovered after the central bank started to run balance of payments surpluses following a decision to end money printing to sterilize interventions made with Indian Asian Clearing Union money.
Worker remittances coming through official channels fell in 2021 which could not be paid for by the banking system at the official rate as money was printed to sterilize interventions and keep a policy rate down, triggering parallel exchange rates, which were settled outside the formal banking system.
Worker remittances is one of the top foreign exchange revenue earners for the island nation which is still recovering from an unprecedented economic crisis.
From April 2022, the interest rates were raised by unprecedented levels, slowing credit and the need to print money to keep rates down. (Colombo/June 08/2024)