By: Staff Writer

November 11, Colombo (LNW): Sri Lanka’s economy saw a significant boost in October, as worker remittances continued to grow, reinforcing both foreign currency reserves and the value of the rupee.

Migrants working abroad sent back a total of US$ 587.7 million in October, surpassing both the previous month’s figure of US$ 555.6 million and the same period last year, when the country received US$ 517.4 million.

This upward trend in remittances provides crucial support for the country’s economy, particularly ahead of the year-end festive season, when remittance inflows typically rise even further.

For the year-to-date, total remittances have reached US$ 5.43 billion, marking an 11.7 percent increase compared to the same period in 2023.

This brings Sri Lanka closer to the goal of surpassing the US$ 7 billion mark in remittances, a milestone not achieved since 2020. The increase in remittances plays a vital role in bolstering foreign reserves and supporting the country’s currency.

This surge in remittances mirrors trends seen across the region, where countries have also benefited from growing remittance inflows. Sri Lanka, in particular, is seeing a dramatic rise in remittances, estimated at US$ 1.5 billion annually.

This trend reflects the ongoing migration of Sri Lankans seeking better job opportunities abroad, a pattern expected to continue in the coming years.

The Sri Lankan government, through the Central Bank, is closely monitoring the impact of these remittances on the national economy. 

Key areas of focus include the developmental benefits of these inflows, the high transaction costs associated with remittances, and the level of transparency in the remittance sector, especially in the informal channels.

While it is still early to predict the long-term effects of this trend, the current influx is being seen as a significant positive factor for the country’s foreign exchange stability.

In addition to remittances, the tourism sector has also contributed to strengthening Sri Lanka’s foreign currency reserves.

This has enabled the Central Bank to purchase US$ 189.5 million in the domestic foreign currency market in October, a substantial amount for a single month.

This purchase helped to increase the country’s gross official reserves to US$ 6.47 billion, up from US$ 5.99 billion in September.

The continuous inflow of remittances, along with other factors like tourism revenue, has supported the appreciation of the Sri Lankan rupee, which has gained 10.7 percent against the US dollar so far this year, adding to a 12 percent rise in 2023.

These developments have provided relief from inflationary pressures, particularly in reducing the cost of imported goods.

Looking ahead, Sri Lanka is on track to surpass the US$ 7 billion mark in remittances, driven by a growing number of migrant workers sending money back to their families, further stabilizing the country’s economy.