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Saturday March 2nd, 2024

Sri Lanka central bank discontinues incentive for foreign remittances

ECONOMYNEXT – Sri Lanka’s central bank has discontinued an incentive of 2 rupee per every US Dollar paid on conversion of inward workers’ remittances from January 1, sources from two banks’ treasuries said.

The incentive was granted in December 2021 to encourage remittances through formal banking networks as many foreign workers sent money through illegal hawala or undiyal methods as those methods paid them a higher amount for foreign currencies when the central bank propped up the rupee currency artificially.

However, the remittances did not pick up as expected.

“The central bank has asked banks to stop the 2 rupee incentive given to every US dollar remittance from this year,” one source told EconomyNext, asking not to be named as he does not have authority to speak to the media.

“It did not boost the remittances as expected anyway.”

Another treasury dealer in a foreign bank based in Colombo said they received the central bank direction on discontinuing the incentive dated December 30 and they have informed all their customers.

Though the island nation saw a record 311,269 people leaving the country as migrant workers last year, the worker remittances plummeted 36 percent to $3.3 billion in the first 11 months of the year compared to the previous year’s $5.2 billion, as many people still have not switched to legally accepted formal banking channel.

The island nation’s rupee fell from 200 rupees per dollar to 360 rupees –within three months in the first half of 2022 after the central bank printed billions of rupees to finance the government spending in the face of higher state expenditure and lower government revenue. (Colombo/Jan05/2022)

Comments (2)

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  1. C N U says:

    The government should remove the restrictions/impediments placed upon the so-called Non-Resident (NRs) Sri Lankans before seeking their remittances into SL. You cannot treat the NRs as villains and ask for help. You cannot have both ways.

  2. Kester says:

    It is sad to notice people in places like the central bank make decisions without in-depth knowledge of an issue. The professionals here are paid well with the poor man’s money to do a proper job. But they are also not better that the others. Try to understand what and where things are wrong and find solutions.

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Your email address will not be published. Required fields are marked *

  1. C N U says:

    The government should remove the restrictions/impediments placed upon the so-called Non-Resident (NRs) Sri Lankans before seeking their remittances into SL. You cannot treat the NRs as villains and ask for help. You cannot have both ways.

  2. Kester says:

    It is sad to notice people in places like the central bank make decisions without in-depth knowledge of an issue. The professionals here are paid well with the poor man’s money to do a proper job. But they are also not better that the others. Try to understand what and where things are wrong and find solutions.

Sri Lanka eyes SOE law by May 2024 for better governance

ECONOMYNEXT – Sri Lanka is planning to pass a Public Commercial Business (PCB) Act improve governance of state-owned enterprise by May 2024 as part of an anti-corruption efforts following an International Monetary Fund assessment.

Sri Lanka’s state enterprises have been used by politicians to give ‘jobs of the boys’, appropriate vehicles for personal use, fill board of directors and key positions with henchmen and relatives, according to critics.

Meanwhile macro-economists working for the state also used them to give off-budget subsides or made energy utilities in particular borrow through supplier’s credits and state banks after forex shortages are triggered through inflationary rate cuts.

The government has taken billons of dollars of loans given to Ceylon Petroleum Corporation from state banks.

There have also been high profile procurement scandals connected to SOEs.

An SOE Reform Policy was approved by Sri Lanka’s cabinet of ministers in May 2023.

The Public Commercial Business (PCB) Act has now been drafted.

A holding company to own the SOEs will be incorporated and an Advisory Committee and Board of Directors will be appointed after the PCB law is approved, the statement said. (Colombo/Mar01/2024)

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Sri Lanka rupee closes at 308.80/90 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 308.80/90 to the US dollar Friday, from 309.50/70 on Thursday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.02.2026 closed at 10.65/75 percent up from 10.50/70 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent from 11.90/12.10 percent.

A bond maturing on 01.07.2028 closed at 12.15/35 percent down from 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent up from 12.30/45 percent.

A bond maturing on 15.05.2030 closed at 12.30/45 percent down from 12.35/50 percent.

A bond maturing on 01.07.2032 closed at 12.50/13.00 percent from 12.55/13.00 percent. (Colombo/Mar1/2024)

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Sri Lanka stocks close up 0.37-pct, Expo to de-list

ECONOMYNEXT – The Colombo Stock Exchange closed up 0.37 percent on Friday, and SG Holdings, the parent company of Expolanka Holdings Plc, said it was taking the company private.

Expolanka is the largest listed company on the Colombo Stock Exchange.

“Expolanka Holdings PLC has, at the Board Meeting held on 1st March 2024, considered a request from its principal shareholder and resolved to initiate the de-listing of the Company’s shares from the Official List of the Colombo Stock Exchange subject to obtaining necessary shareholder approval and regulatory approvals,” the company said in a stock exchange filing.

As per arrangements with SG Holdings Global Pte Ltd, the Company’s majority shareholder, it will purchase its shares from shareholders who may wish to divest their shareholding in the Company at a purchase price of Rs 185.00 per share. The share closed up at 150.50.

The broader All Share Index closed up 0.37 percent, or 39.47 points, at 10,691; while the S&P SL20 Index closed down 0.64 percent, or 19.59 points, at 3,037.

Turnover stayed above the 1 billion mark for the sixth consecutive day, registering 1.4 billion.

Crossings in Melstarcorp Plc (135mn) up at 89.50, Hatton National Bank Plc (64mn) up at 158.00, Hemas Holdings Plc (53mn) up at 75.00 and Central Finance Company Plc (26mn) up at 103.50, added significantly to the day’s turnover.

“The upward trend is continuing, with more retail buying also coming in, the number of trades was more than 10,000 today,” a market participant said. “Investors are looking for undervalued stocks and buying in quantities.” (Colombo/Mar1/2024).

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