Remittances to Sri Lanka are largely dependent on temporary labor migration. About 2 million Sri Lankan migrants sent remittance of $7.16 billion in 2018 which constituted 8.25 percent of the GDP, contributing a higher share of the country's total foreign exchange earnings. In 2019, an estimated $6.7 million was sent by migrants, which covered 84% of the country's trade deficit.
With the COVID-19 pandemic, global recession including falling oil prices and job loss, the World Bank projects that the remittance to Sri Lanka will decline by 19 percent this year. However, the more pressing issue for the Sri Lankan government is to repatriate the migrant workers who have lost their jobs and without access to proper health facilities in the foreign countries amid the pandemic.
Under normal circumstances, migrant workers do return and reintegrate back into their home communities once they can establish a favorable financial condition. The successful economic integration can only happen with good remittances management strategies that will reduce the dependence on remittance for income and makes re-migration a choice rather than a necessity.
Particularly for Sri Lankans migrants, much of the remittances go to consumption and not to saving or investment. The knowledge of financial literacy is very crucial to manage earnings, plan for the future, and meet the challenges of life such as losing a job or other emergencies.
Financial tips of Sri Lankans returning home:
Migrants go to other countries in search of better economic opportunities to provide for their families. Working in foreign countries, they often have to balance personal financial needs and the needs of the family left behind. Joint financial planning is crucial for setting realistic expectations and working together to achieve financial goals.
Pre-departure planning may include the duration and the specific goals of migration, the cost of migration, and how to finance it. Participation of the family members in the decision-making process also enhances trust and builds better relationships.
It reduces family tension that can happen over the control and misuse of remittances. Understanding that remittances are hard-earned money often in harsh working conditions will promote the wise use of money.
Government authorities have recognized the importance of financial literacy as part of beneficial migration. As part of long term and sustainable economic development, authorities both in the sending and receiving countries need to come with financial products and services (such as savings, loans associated with remittances, insurance and credit, and electronic payment facilities) for the migrants to help better manage their money.
Banks and microfinance institutions can provide such facilities and at the later stage also offer a suitable framework for small-scale investments for the migrants. Understanding financial products and knowing how to take advantage of them is a priority.
Migrants will benefit from increased financial inclusion which will give access to these financial products and services and start building their financial future.
Building a saving culture especially for retirement, children's education, or for medical and other emergencies; making a budget according to the income and keeping track of expenditure are basic habits for a healthy financial life.
Such habits not only ensure short-term financial security but it also paves the way for long term financial security and breaks the reliance on remittances income.
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Having additional sources of income through investing remittance productively like starting small scale enterprises will stop the family from being remittance dependent and eventually, create a favorable situation to return home and reintegrate economically.
The cost and difficulties while sending remittances can be avoided by opting for safe and cost-effective remittance methods i.e send money online. Sending money online through money transfer specialists is the safest and cheapest way to send money to Sri Lanka.
Digital financial products such as mobile money and e-wallets are gaining popularity which has the potential to make remittances safer, cheaper, and faster and also provide a convenient way to send money online and a secure way to store the remittances received by the migrants' family. Access to such money transfer services is crucial for migrants who want to send more money home and also save more.
In conclusion, being financially educated and the ability to make sound financial decisions at different stages in the migration cycle viz. pre-departure, during service and return, and reintegration are essential, especially for temporary migration workers. Sri Lankan authorities have had to impose travel restrictions on Sri Lankan migrant workers who had planned to return home and those who were to leave the country for foreign employment. This was due to safety and security reasons as the positive cases of COVID-19 continued to rise. From 24 July, Sri Lanka is exempted from the list of countries where non-essential international travel is prohibited. Foreigners in Sri Lanka who wish to return to their respective countries are advised to contact the nearest Sri Lankan High Commission for guidance.
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