Migrant workers' remittances projected to decline by 14% by 2021

As the COVID-19 pandemic and economic crisis continues to spread, the amount of money migrant workers send home is projected to decline 14 percent by 2021 compared to the pre-COVID-19 levels in 2019. According to the latest estimates published in the World Bank’s Migration and Development Brief remittance flows to low and middle-income countries are projected to fall by 7 percent, to $508 billion in 2020, followed by a further decline of 7.5 percent, to $470 billion in 2021. The World Bank says in Sri Lanka, remittances are projected to fall by about 9 percent in 2020 to $6.7 billion. For the first time in recent history, the stock of international migrants is likely to decline in 2020, as new migration has slowed and return migration has increased. According to the Central Bank, inflows from worker remittances reached 130 billion rupees in September 2020, a 6% increase compared to the previous month and 40 percent higher compared to September last year. Remittance inflows during the January to September window this year reached 935.5 billion rupees, 6.7 percent higher compared to the corresponding period last year. The Central Bank has projected a 14.6 percent decline in the remittance income for the full year as it revisited its earlier projections due to the virus. Amidst an increase in remittance inflows, Fitch Ratings, in a recent forecast, estimated on an average a 12% drop in annual remittances for Sri Lanka, as temporary support factors for the increase in remittances fade. State Minister of Money and Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal inflows from workers’ remittances, savings on import restrictions and lower crude oil prices, and improved export performance is projected to compress Sri Lanka's external current account deficit to below 1.5% of GDP in 2020.