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Remittances drop YoY despite Central Bank’s moves

13 Jul 2022

  • $ 304 mn inflows in May compared to $ 460 mn in 2021
  • Records $ 55 mn growth compared to April this year
  The workers’ remittances have declined in May 2022 in comparison to May 2021, as the remittances of this May remain at $ 304 million, while remittances in the same month last year remained at $ 460 million, which is a 33.9% gap despite the prevailing forex crisis. According to the data provided by the Central Bank of Sri Lanka (CBSL), a sum of $ 1.33 billion was earned from January to May 2022, which is a 53.1% fall as compared to 2021 when Sri Lanka was able to earn $ 2.84 billion during the period from January to May.     However, workers’ remittances increased in May 2022, compared to April 2022, where it increased to $ 304 million during May 2022, in comparison to $ 249 million in the previous month and $ 460 million in the corresponding month in the previous year (2021).  Foreign investment in the Government securities market and the Colombo Stock Exchange (CSE) recorded marginal net inflows during May 2022.  This increase in workers’ remittances can mainly be attributed to the stability observed in the domestic foreign exchange market, along with the narrowing of the gap between the grey market and the official exchange rate.  Considering the liquidity pressures witnessed in the domestic foreign exchange market, the Central Bank imposed cash margin requirements in May 2022, while the Government introduced restrictions on open accounts and consignment payments terms, among others. These measures were expected to curtail activity in the informal foreign exchange market and narrow the gap between the official and grey market exchange rates.  Meanwhile, the weighted average spot exchange rate in the interbank market remained stable around Rs. 359 per US dollar during the month, helped by the measures introduced to manage pressures in the domestic foreign exchange market, along with the market guidance. Meanwhile, total departures for foreign employment were recorded at 22,194 during the month of May 2022, contributed by the unskilled (7,453), skilled (6,947), and domestic aid (4,793) categories. Total departures for foreign employment during January-May 2022 were recorded at 113,757, compared to 26,450 in the corresponding period of the previous year and 117,952 in the 2021.  


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