FrontPage Journal | Business News
Sri Lanka recorded a sharp rise in worker remittances in July 2025, receiving USD 697.3 million, up from USD 635.7 million in June, according to the Central Bank of Sri Lanka. This 9.7% month-on-month growth underscores the continued resilience of external income flows, even amid a challenging global economic environment. Compared with July 2024, when remittances stood at USD 576.7 million, the latest figure reflects an impressive year-on-year increase of nearly 21%, reinforcing the sector’s role as a critical lifeline for the economy.
Remittances remain the single largest source of foreign exchange earnings for Sri Lanka, surpassing traditional export revenues in some months and providing vital support for the country’s balance of payments. This sustained growth is partly attributed to improved stability in official exchange rates, stronger compliance monitoring to channel remittances through formal banking channels, and targeted promotional campaigns in key overseas labor markets such as the Middle East, South Korea, and parts of Europe. The return of confidence among expatriate workers in using legal remittance avenues has also reduced the leakage to informal hawala systems.
The stronger inflows have helped boost the country’s gross official reserves to USD 6.14 billion by the end of July. This figure includes bilateral arrangements such as the People’s Bank of China currency swap, which continues to provide additional liquidity support. While part of the reserve accumulation is tied to short-term instruments and bilateral commitments, the steady inflow from remittances adds a more sustainable foundation to the country’s external position.
From a macroeconomic standpoint, the current remittance trend plays a crucial role in mitigating the impact of Sri Lanka’s still-substantial external debt servicing obligations. With global oil prices showing volatility and import requirements expected to rise toward the year-end festive and tourism seasons, maintaining such robust inflows will be essential to avoiding renewed pressure on the currency. Moreover, a stronger reserve position offers the Central Bank greater flexibility in managing exchange rate stability, curbing inflationary pass-through from imports, and rebuilding market confidence.
However, the long-term trajectory will depend on both global and domestic factors. A slowdown in global economic growth, particularly in host countries for Sri Lankan migrant workers, could dampen remittance growth. At the same time, policy consistency, digital payment innovations, and competitive exchange rate management will be necessary to sustain the upward momentum. There is also room for the government to leverage this inflow beyond consumption, by creating instruments that channel part of remittance income into productive investments such as SME financing, housing development, and export-oriented ventures.
In a period where export earnings face headwinds and tourism remains vulnerable to global demand shocks, worker remittances continue to serve as one of the most reliable buffers for Sri Lanka’s economy. The July data reinforces not only the resilience of the country’s overseas workforce but also the potential of remittance-driven stability in steering the nation toward a stronger external balance in the months ahead.
