Sri Lanka remittances up 8.8-pct in January
ECONOMYNEXT – Sri Lanka’s worker remittances rose 8.8 percent from a year earlier to 729.4 million dollars in January 2018, after ending 2017 with total inflows down 1.1 percent to 7,164 million US dollars as oil prices fell and labour markets tightened.
Sri Lanka’s South Asian neighbours have seen steeper downturns of remittances with sharp falls in labour exports especially to Saudi Arabia as construction projects stalled.
Exports of Pakistani workers to Saudi Arabia fell from a peak of 522,000 in 2015 to 462,000 in 2016 and just 143,000 in 2017, according to published data.
Some gulf countries have also started taxing remittances and tightened money laundering laws, which may push more money transfers to ‘hawala’ or unofficial channels, where transfer fees were lower in the past.
Kuwait’s parliament has approved a tax of up to 5 percent for money transfers by expatriate workers. Transfers up to 99 Dinars will be taxed at 1 percent, 100-299 will be charged 2 percent, and 200-499 will be charged 3 percent.
For poorer people even in hawala transactions will cost more money than in the past, analysts say.
Hawala is an unofficial international net settlement system, which operates either due to inefficiencies in the formal banking system which charges too much, or because of exchange rate restrictions by central banks which are printing money or import taxes which are too high. (Colombo/Apr03/2018)