Worker remittances help Sri Lanka weather shocks

Image courtesy of Sanjeewa Dayarathne (www.Feedback.lk)

SINGAPORE, September 16, 2006 (LBO) – Workers’ remittances is turning out to be an attractive sources of foreign financing for countries like Sri Lanka, which can sometimes use them as a buffer against oil shocks, the International Monetary Fund said Saturday. But they may be of only limited value in absorbing shocks and reducing vulnerability to crisis. Remittances are particularly important for Asian countries like Sri Lanka, with over 80 percent of its migrant population. They have, over the years, proved to be much more stable than private capital flows and also don’t create obligations in the future, IMFs Director Asia & Pacific Dept, David Burton said.

Around 1.5 million Sri Lankans working and residing overseas sent home 1,918 million dollars last year, and the island’s Central Bank is hoping to double remittances to 3,000 million dollars by 2007.

Workers’ remittances for the first seven months climbed 24 percent to 1,359 million dollars as against the same period last year, and commercial banks are now offering incentives like cheaper housing loans and insurance schemes to encourage more cash transfers.

“If we keep that momentum up, we can look to an average of 2,350 million dollar inflow this year and around 3,000 millio