Policy and Regulatory Framework for Remittance - Sri Lanka

Abstract

The benefits obtained by the country by labour migration is manifold. Apart from being one of the largest sources of foreign remittances to the national economy, contribution towards reducing unemployment, and poverty alleviation, particularly of rural households is indisputable. However, of the over one million migrants five hundred thousand are found to be illegal migrants. Consequently, in spite of there being several financial institutions, incentive schemes and money transfer channels for management of remittances, about 50% of the remittances are sent through informal channels. This study provides several recommendations to reduce such informal remittances and enhance the use of formal channels for remittances. The author is of the view, those restrictive licensing policies and regulations are a barrier to the better utilization of remittances, and that reforms in this sector is the answer.