By: Staff Writer
October 11, Colombo (LNW): Sri Lanka’s foreign remittances have surged to record levels in 2025, driven by a sharp rise in overseas employment and a return of confidence in formal banking channels, providing much-needed relief to the island’s fragile foreign exchange reserves.
According to the latest data released by the Central Bank of Sri Lanka (CBSL), official worker remittances rose 25.2 percent year-on-year to US $695.7 million in September 2025, marking one of the strongest monthly inflows since the onset of the economic crisis. Cumulative remittances for the first nine months of the year reached US $5.81 billion, reflecting a 20 percent increase compared to the same period in 2024.
This continued momentum follows a strong rebound in 2024, when annual inflows climbed 10.1 percent to US $6.57 billion, up from US $5.96 billion the previous year. It was the highest level in six years, underscoring the growing importance of migrant workers in stabilizing Sri Lanka’s post-crisis economy.
The surge in remittances has coincided with an unprecedented wave of labour migration. Data from the Sri Lanka Bureau of Foreign Employment (SLBFE) shows that 212,302 Sri Lankans left the country for employment between January and August 2025, largely to destinations in the Middle East, South Korea, and Europe. Authorities expect this figure to surpass the record set in 2024, as both skilled and unskilled workers continue to seek better opportunities abroad amid high domestic unemployment and inflation pressures.
Since declaring bankruptcy in 2022, Sri Lanka has prioritized foreign employment as a key policy tool to boost foreign exchange inflows. The government has particularly encouraged the migration of professionals such as healthcare workers, IT specialists, and engineers, aiming to increase the quality not just the quantityof remittances.
A key factor behind the recent rise in official remittances has been the normalization of exchange rate policies. For much of 2021 and 2022, the CBSL’s attempt to maintain a dual exchange rate system led to a booming black market for foreign currency. Expatriates, offered better rates through informal Undiyal and Hawala networks, avoided the formal banking system causing a sharp drop in official remittance flows.
However, after the CBSL abandoned the parallel rate regime in early 2023, confidence in the formal financial system began to recover. The unification of the exchange rate and improved liquidity conditions encouraged expatriates to send money home through official channels, helping rebuild foreign reserves and stabilize the rupee.
Worker remittances remain one of Sri Lanka’s largest sources of foreign exchange, alongside tourism and exports. The steady inflows have been instrumental in financing essential imports, easing foreign currency shortages, and supporting macroeconomic stabilization under the ongoing IMF Extended Fund Facility (EFF) programme.
Yet, analysts caution that while remittance growth is a positive sign, it also reflects a troubling social reality: the continued outflow of Sri Lanka’s working-age population. Economists warn that long-term dependence on foreign labour could exacerbate domestic skill shortages and slow economic recovery if not balanced with sustainable job creation at home.
With remittance inflows now on track to exceed US $7 billion by the end of 2025, policymakers face a dual challenge maximizing the benefits of migrant earnings while addressing the economic conditions that compel so many Sri Lankans to seek livelihoods abroad.
If current trends persist, the island’s financial stability may strengthen in the short term but the social cost of its overseas labour exodus will remain an enduring concern.
