Sri Lanka’s official worker remittances have surged past $3.1 billion in the first five months of 2024, marking an 18.2% increase from $2.62 billion recorded during the same period last year, according to newly released Central Bank data. The increase reflects a significant rise in the number of Sri Lankans leaving the country for employment abroad amid the nation’s ongoing post-crisis recovery.
In May alone, remittances totaled $641.7 million, reflecting a 17.8% year-on-year growth, maintaining the upward trend that began in 2023. This growth momentum puts Sri Lanka on track to surpass last year’s annual remittance total of $6.57 billion, which itself marked a 10.1% increase from nearly $6 billion in 2022.
Worker remittances remain a key source of foreign exchange for Sri Lanka, which is still grappling with the aftershocks of its 2022 sovereign default and economic collapse. Remittances are not only critical to stabilizing the island’s balance of payments but also offer a buffer against inflationary pressures and currency volatility.
The sharp rise is largely attributed to the record number of Sri Lankans migrating for employment, particularly to the Middle East, Europe, and East Asia, seeking better opportunities amid domestic economic hardship. In response, the government has actively promoted labour migration as a strategic policy to boost foreign inflows.
A crucial turning point came after the Central Bank abolished the parallel exchange rate regime, which had previously driven many expatriates to send money through informal channels such as Undiyal and Hawala, where higher black-market rates were offered. The shift back to official banking channels has since improved transparency and formal inflows.
During 2021, remittances plummeted as the dual exchange rate system and money printing to suppress interest rates created distortions in the forex market. The Central Bank’s subsequent policy rate hikes in 2022, followed by a shift to a more dovish stance, restored confidence in the formal financial system.
As Sri Lanka continues to prioritize overseas employment as a foreign exchange strategy, remittance growth is expected to remain a vital component of the country’s economic stabilization and debt restructuring roadmap.
