Sri Lanka’s overseas worker remittances fell in November 2024 for the first time in 27 months, official data revealed. The inflows dipped 1.3% to $530.1 million compared to the same month last year.
Since August 2022, monthly remittances have been rising consistently on a year-on-year basis, marking a 27-month growth streak through October 2024, according to the Central Bank.
Despite the recent decline, total remittances for the first 11 months of 2024 reached $5.96 billion, a 10.4% increase compared to $5.4 billion during the same period in 2023.
Worker remittances are a vital source of foreign exchange for Sri Lanka, aiding its recovery from the 2022 economic crisis. The growth in remittances has been attributed to the Central Bank’s decision to abandon a parallel exchange rate system, which had previously driven expatriates toward informal money transfer methods like Undiyal and Hawala.
In 2023, remittances through formal banking channels surged by 57% to $5.97 billion from $3.8 billion in 2022. This shift was largely due to the elimination of the dual exchange rate system, which boosted confidence in official channels.
The government has also increased efforts to send more workers abroad to bolster foreign exchange earnings since declaring bankruptcy in 2022. However, in 2021, remittances through official channels declined sharply as many expatriates opted for informal networks offering higher rates.
Sri Lanka’s Central Bank raised interest rates significantly in April 2022, curbing the need to print money to maintain low rates and stabilizing the formal exchange rate system. These measures have played a pivotal role in reshaping the remittance landscape.
