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Sri Lanka's remittance surge bolsters economic recovery amid reforms
Over 3 million Sri Lankan diaspora likely to remit more money this year
- PUBLISHED: Wed 4 Feb 2026, 4:57 PM
- By:
- Muzaffar Rizvi
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Remittance inflows to Sri Lanka are expected to continue their upward trajectory this year, as approximately three million Sri Lankans residing abroad are anticipated to remit increased amounts to support their families.
According to analysts and financial experts, the island nation is projected to receive over $8 billion in remittances in 2026, compared with $7.8 billion recorded last year. Tourism earnings are also expected to rise as the country continues to recover from its economic crisis and attracts a growing number of visitors from the Middle East and other global regions. In 2025, Sri Lanka recorded 2,362,000 tourist arrivals, generating $3.2 billion in tourism revenue.
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“Sri Lanka is expected to generate more than $12 billion in foreign exchange through remittances and tourism, providing a renewed lifeline to the national economy,” an analyst observed.
Sri Lanka is further positioning itself as a premier tourism destination for travellers from the United Arab Emirates, with an ambitious plan to increase the number of UAE visitors from 20,000 to 40,000 by the end of 2026. In the long term, the country aims to welcome as many as 100,000 UAE tourists annually.
Central Bank’s Integral Role
Workers’ remittances remain the country’s most substantial and dependable source of foreign exchange, playing a pivotal role in Sri Lanka’s broader economic recovery. Remittance inflows increased by 19 per cent year‑on‑year last year following the Central Bank of Sri Lanka’s implementation of measures aimed at discouraging the use of informal transfer mechanisms such as hawala and undiyal.
The central bank also advised members of the Sri Lankan diaspora to freeze accounts containing unexplained deposits to encourage the redirection of funds into formal channels, particularly during the post‑2021 economic crisis. The majority of remittances continued to originate from the Middle East — especially GCC countries — while contributions from Europe, Asia, and the United States also demonstrated notable growth.
Remittances have consistently risen since the central bank discontinued the parallel exchange‑rate regime, which had previously prompted many expatriates to utilise informal transfer systems such as hawala and undiyal.
Additionally, the Sri Lankan government announced in the 2026 budget its intention to introduce housing loans and a contributory pension scheme for citizens employed overseas — an initiative designed to further strengthen remittance inflows.
Over the past four years, Sri Lanka has received more than $24 billion in remittances, largely driven by labour markets in the Middle East, including the UAE. These inflows have reinforced the sector’s role as a cornerstone of economic stability and resilience.
Remittances from the UAE remain among Sri Lanka’s most significant and reliable foreign income streams. The UAE continues to rank as one of the leading remitting countries, underscoring its importance as a major destination for Sri Lankan migrant labour.
“Across the Middle East — particularly in the UAE — remittances contributed substantially to Sri Lanka’s record‑high inflows in 2025, enabling the country to reach an estimated $7.8 billion. These consistent inflows strengthen the external sector, support household livelihoods, and stabilise foreign exchange reserves,” an expert said.
Rising Migration Figures
Sri Lanka has increasingly focused on sending professional and semi‑skilled migrant workers abroad to secure higher foreign exchange earnings, particularly after the country declared bankruptcy in 2022.
“The record level of worker remittances corresponds with a rise in the number of Sri Lankans seeking foreign employment during the nation’s recovery from the unprecedented 2022 economic crisis,” official data indicate.
In 2025, more than 300,000 Sri Lankans departed for overseas employment, including 184,085 men and 116,106 women. In comparison, 314,673 Sri Lankans travelled abroad for employment in 2024.
Kuwait remained the leading destination for Sri Lankan migrant workers in 2025, recording 75,200 departures. The UAE ranked second, with 57,037 workers travelling for employment.
According to statistics from the Sri Lanka Bureau of Foreign Employment, an increasing number of Sri Lankans are also seeking job opportunities in South Korea, Israel, Romania, the United Kingdom, Australia, and Japan.
“Sri Lanka has introduced a range of structural and regulatory reforms aimed at increasing remittance inflows and ensuring that migrant workers utilise formal financial channels. These reforms focus on exchange‑rate management, improved migration governance, strengthened financial infrastructure, and enhanced worker protections.”
Analysts further note that government initiatives are beginning to yield measurable results. “Key policies aimed at formalising remittance channels, digitising transfer systems, stabilising macroeconomic conditions, safeguarding migrant workers, and expanding viable investment opportunities are generating positive outcomes. Collectively, these measures are contributing to sustained remittance growth while enhancing the country’s overall economic resilience,” they said.
