Foreign exchange crisis: Sri Lanka offers incentive for remittances

Sri Lanka: As part of its efforts to address Sri Lanka's exceptional foreign exchange crisis, Sri Lanka's central bank has provided an incentive to overseas workers who remit money through legitimate channels. The Central Bank of Sri Lanka (CBSL) has "agreed to give an incentive of Rs.8 per US dollar for workers' remittances, in addition to the existing incentive of Rs.2 under the 'Incentive Scheme on Inward Workers' Remittances'," according to the CBSL.

The incentive will be paid if funds are remitted through Licensed Banks and other globally recognised formal channels and converted into Sri Lankan rupees between December 1 and December 31, according to a statement released by the central bank on December 1. As a result, for the month of December, the total incentive for inward workers' remittances translated into Sri Lankan rupees will be Rs.10 per US dollar.

According to the statement, "the additional incentive given by the CBSL is intended to lure more employees' remittances into the country through official banking channels, hence increasing foreign currency liquidity in the local foreign exchange market." Ajith Cabraal, the CBSL's chief, had previously warned that anyone who engage in unregulated money transfers could have their accounts frozen.

Last month, Finance Minister Basil Rajapaksa informed Parliament that the government was facing a catastrophic problem, with foreign reserves at USD2.3 billion, down from USD7.5 billion when his brother, President Gotabaya Rajapaksa, assumed office in 2019.

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