Sri Lanka’s worker remittances fell for the third consecutive month in May, while the remittance inflows in the first five months of the year narrowed quite substantially even before the Gulf crisis surrounding Qatar and its Arab neighbours took hold.
The latest provisional statistics for the month of May showed that the worker remittances, which traditionally strengthen the country’s balance of payment (BoP) position and the gross official reserves, have fallen by about 4.0 percent year-on-year (YoY) or US $ 22 million to US $ 575.4 million.
The cumulative inflows for the first 5 months have also fallen by 5.8 percent year-on-year (yoy) to US $ 2, 797 million – placing the total decline to US $ 172 million in absolute terms.
The reversing of this negative trend is imperative for the country to avoid possible BoP trouble towards the end of the month amid rising imports and slower tourism earnings.
Traditionally, strong remittances and tourism inflows rescue the Sri Lankan economy from BoP crises, as those two together absorb close to US $ 10 billion trade deficit left by ever rising imports.
In 2016, migrant workers sent a total of US $ 7.2 billion and tourism brought in a total of US $ 3.5 billion.
The fact that the slowdown in remittances was observed even prior to the prolonged crisis in Qatar and its Arab neighbours, may have sent a worrying signal to the Lankan authorities over the future viability of an otherwise strong inflow.
“The ongoing Qatar-Gulf crisis could also pose a risk to worker remittances as Qatar is a key migrant employment destination for Sri Lankans,” said Y. Indraratne, Head of Central Bank’s Economic Research Unit at a recent media briefing.
Qatar accounts for a quarter of Sri Lankan migrant workforce, and according to the data compiled by the Economic Intelligence Unit of the Ceylon Chamber of Commerce 65, 139 departures out of total departures of 263, 389 has been to Qatar in 2015.