Remittances Stay Strong as Tourism Slumps 17% Amid Middle East Crisis: CBSL

COLOMBO (News 1st); Governor of the Central Bank of Sri Lanka (CBSL), Dr. Nandalal Weerasinghe, says Sri Lanka has not recorded any decline in worker remittances so far, despite the ongoing Middle East crisis, while reiterating that there is no need at present to impose restrictions on imports, capital flows, or remittance movements.

Dr. Weerasinghe said remittances continue to be the country’s largest source of foreign inflows and have remained higher than usual in recent periods.

“When you look at these remittances, we have not seen any decline so far,” the Governor said, adding that remittance inflows have been above normal levels. In contrast, he noted that tourism has been affected, with arrivals down by around 17 percent so far, while other components of external inflows have not shown notable deterioration.

Central Bank data presented alongside his remarks show that tourist arrivals declined by 17.4 percent year-on-year as at 22 March 2026, with arrivals for the year so far reaching 692,744, compared to the previous year.

Tourism earnings for January and February 2026 amounted to USD 730.3 million, slightly down from USD 768.2 million recorded during the same period in 2025. Total tourism earnings for 2025 stood at USD 3.2 billion.

In contrast, worker remittances remained strong. Remittances during January–February 2026 totalled USD 1.5 billion, compared to USD 1.1 billion in the corresponding period of 2025. For the full year 2025, remittance inflows reached USD 8.1 billion.

Dr. Weerasinghe said that while demand conditions may adjust in response to global developments, including the Middle East crisis, it is too early to predict the full impact. He noted that reduced demand could lead to a moderation in imports, not only of vehicles but across a wider range of goods, as both consumers and businesses respond to changing prices.

However, he strongly dismissed the idea of imposing restrictions at this stage. “I don’t think that’s the right way to do that,” the Governor said, emphasizing that the authorities prefer to observe how import demand, export performance, and remittances evolve over a period of time before any policy intervention is considered.

“At this point, from our point of view, we don’t see any requirement, nor do we make any suggestions to restrict capital flows, imports, remittances, or even outflows,” he said. Dr. Weerasinghe added that all relaxations implemented so far remain in place and will continue to prevail. He stressed that price adjustments would manage money demand naturally, rather than administrative controls.

Responding to a question on whether the Central Bank has assessed the potential impact of the Middle East crisis on Sri Lanka’s main foreign inflows, remittances, exports, and tourism, Dr. Weerasinghe said current data does not point to a broad-based decline.

“Actual data we have shows the obvious decline in tourism,” he said, clarifying that remittances have remained stable or slightly higher. He suggested that during times of uncertainty, overseas Sri Lankans may send additional funds to support family members at home.

Looking ahead, the Governor said the Central Bank is closely monitoring early indicators, including labour market developments in the Middle East. He noted that there have been no signs of large-scale returns of Sri Lankan workers from the region, nor any indication from diplomatic missions encouraging people to return.

“There’s no sign of people coming back,” he said, acknowledging that while some unemployment may exist, it has not translated into reduced remittance inflows.

Dr. Weerasinghe noted that the Central Bank will continue to observe developments carefully, maintaining existing policy settings while allowing market adjustments to manage demand, as authorities remain prepared to respond if conditions change materially in the future.