Inward remittances mainly from blue collar expat workers in the Middle-East, which turns Sri Lanka’s negative balance of payments to positive, grew 27 percent in March quarter from a year earlier, according to Central Bank data.
Money remitted by Sri Lankans working abroad was recorded at USD 1.27 billion (1,273.7 million rupees) as at March 31, 2011.
Remittances for the full year 2010 was recorded at USD 4.1 billion, an increase of 23 percent form the USD 3.3 in 2009 and almost double the remittances received in 2006.
The Central Bank says the increase in skilled labor migration from 61,321 in 2009 to 71,114 in 2010 has contributed to the increase.
Nearly 7.5 percent of Sri Lanka's 20 million population work mostly in blue collar jobs in Gulf states like Saudi Arabia, Oman, Qatar, Dubai, Lebanon and Syria.
State owned Bank of Ceylon, which holds the lions share in Sri Lanka’s remittances market said it has received 110 billion rupees in inward remittances during the first five months of 2011.
Last year the bank recorded 201 billion rupees in inward remittances and forecast the number to grow to 250 billion rupees by end 2011.
However the banks said growth in remittances from the Middle East has slowed down while money from the EU region, far east and countries like the US, Canada grew faster last year.
“The growth from the Middle East is not the way it was in the previous years,” said Gamini Wickramasinghe, chairman at BOC, the largest commercial bank in the island.
He said unrest in the middle east early this year has not had a negative impact on the inflow of remittances in to the country.
Remittances are vital to bridge Sri Lanka's trade deficit, and dollar savings in commercial banks are increasingly tapped by the government, through dollar denominated floating rate bonds.