Sri Lanka worker remittances declining since 2015
View(s):While Sri Lanka’s latest import/export data for the eight months to August 2017 reflects a mixed performance, according to the Central Bank (CB), what must however be worrying policymakers is the gradual decline in foreign remittances.
Remittances, still the largest contributor to foreign exchange earnings, in January –August 2017 fell to US$4,503.3 million against $4,804.1 million in the same 2016 period and $4,598 million in the same 2015 period.
There are two reasons for this, one of which is attributed to falling oil incomes and geopolitical uncertainties in West Asia where a large majority of the country’s 1.5 million workers are stationed. The other reason, not attributed to the CB but which is most likely is a drop in the number of females as domestic workers largely due to the restrictions placed on such employment approvals.
No latest figures of departures are available, another reflection of the weak data collection mechanism by state agencies. The last available data is for 2015 when the number of female worker departures was 90,677, down from 110,486 and 118,053 in 2014 and 2013, respectively, The ratio of female workers compared to the total number of departures also dropped to 34.4 per cent in 2015 (against 65.6 per cent males), 36.7 per cent in 2014 and 40.3 per cent in 2013, according to the Ministry of Foreign Employment. Given these trends, the female worker departure percentage in 2016 (up to September) is expected to have dropped further.
The CB, releasing the economic data for the year to August 2017, said tourism earnings rose in August 2017 but this was dampened by the decline in workers’ remittances together with the expanded trade deficit.
“However, the financial account of the Balance of Payments (BOP) was supported by the receipt of the second tranche of the foreign currency term financing facility to the government along with continued foreign inflows to the Colombo Stock Exchange and the government securities market,” it said.
On a cumulative basis, earnings from exports grew by 7.6 per cent (year-on-year) to $7,413 million during the first eight months of 2017 mainly due to increased earnings received from exports of tea, petroleum products, transport equipment, spices and seafood.
Expenditure on imports increased owing to the higher expenditure incurred on intermediate goods, particularly fuel.
The CB said spending on fuel imports rose sharply in August by 73 per cent (year-on-year). The average import price of crude oil was $53.07 per barrel in August 2017 compared to $46.71 per barrel in August 2016.
Expenditure on textiles and textile articles increased by 7.9 per cent (year-on-year) in August 2017 with higher expenditure incurred on the import of fabrics.
Expenditure on food and beverages grew by 3.7 per cent (year-on-year) in August mainly due to higher expenditure incurred on rice imports.
However, import expenditure on rubber products, beverages and spices recorded a decline in August 2017.
On a cumulative basis, import expenditure increased by 9.6 per cent (year-on-year) to $13,599 million during the first eight months of 2017 largely due to higher imports of fuel, gold and rice.
The cumulative trade deficit during the first eight months of 2017 expanded to $6,186 million from $5,515 million in the corresponding period of 2016.
Tourist arrivals rose marginally by 3.5 per cent to 1,406,854 during the first eight months of 2017 from the corresponding period of 2016 while earnings rose $2,413.7 million in the 8-month period against $2,333.1 million in 2016.
‘During the first eight months of 2017, the overall balance of the BOP is estimated to have recorded a surplus of $2,174.9 million in comparison to a surplus of $211.5 million recorded during the corresponding period of 2016,” the CB report said.