Foreign remittances, lifeline of economy - Dr. Amunugama

"Foreign Remittances have become a lifeline of the Sri Lanka Economy", said Senior Minister for International Monetary Cooperation Dr. Sarath Amunugama.

He was addressing the Asian Forum on Remittances and Development held in Colombo, last week.

The meeting was organised by the Sarvodaya Economic Development Division with the participation of senior bankers, migration institutions and the UNDP.

Dr. Amunugama said that during the difficult days of 2008 and 2009 foreign remittances enabled Sri Lanka to pay for oil imports in spite of the oil crisis that hit the global economy at that time.

He said that foreign remittances must be looked upon as a part of the wider phenomena at migration of labour from developing countries to advanced countries. In the past, in classical economics, we talked of investment capital going beyond national boundaries. Now labour is also going beyond national boundaries, creating counter-cyclic movements to the spread to capital. While capital flows moves eastward, labour flows move westwards.

today economics of countries such as Sri Lanka, Bangladesh, India, Pakistan. Thailand, Philippines and Korea have benefited from such mass migration of labour. These phenomena will be even more noticeable in the future, as advanced economies will be hit a shortage of labour, due to ageing processes which are now a major factor in the economies of advanced countries.

The Minister also drew special attention to the fact that while developing countries gets the benefit of such foreign currency inflows, the poor also benefitted. About US$ 3 billion brought into the country is pumped into the local economy, particularly in the small and medium sectors.

Dr. Amunugama said that local banks must be more attentive to these migrant workers, because they formed a large segment of their business. Banks must come up with more innovative approaches to give better deals to our local men and women who worked abroad.

Unfortunately, our bureaucracy and banking system are not paying adequate attention to the enhancement of prosperity and dignity of these migrants. This is due to the lethargy of the banking system. Telecommunication has filled that gap today. The challenge to "Illegal and havela" financial transfers is offered not by the Banks, but by the telecommunication giants. They make cash transfers very easy and fast. If the banks do not attend to theses functions properly, the telecommunication revolution will supplant them. Thus the bank must rise up this challenge for both business and humanitarian reasons", said Dr. Amunugama.