Jun 23, 2017

Sri Lankan worker remittances retard by Qatar crisis

Remittances from Sri Lankan workers in oil-rich Gulf countries have dropped 15.6 per cent to Rs.487.9 million in April and the Qatar crisis may hit hard the revenue from this sector, Central Bank Governor Dr. Indrajit Coomaraswamy said.

Workers’ remittances recorded a slowdown in the first four months of the year, and any further escalation of geopolitical tensions in the Middle East could adversely affect such inflows in the period ahead, he added.

Dr. Coomaraswamy was responding to a question raised by a journalist at the Central Bank’s monthly monetary policy review media briefing in Colombo on Friday.

Worker remittances during the first four months of the year fell 6.3 percent to Rs.2, 221.7 million, according to Central Bank official data.

The global rating agency says generally, weaker remittances will immediately impact Sri Lanka’s credit profiles via their balance of payment positions.

A prolonged fall would also hurt Sri Lanka’s economic growth, given the importance of remittances to household incomes.

The challenging global environment has taken a toll on the economy with reduced exports and remittances; and significant capital outflows, leaving Sri Lanka with higher public debt, lower reserves and rising inflation, an economic expert said.

However Dr. Coomaraswamy noted that Sri Lanka has been able to maintain macro economic fundamental on a correct track and the country’s foreign reserves recorded a satisfactory level of US$ 7 billion at present.