<p>This study examines the impacts of terrorism incidence, external debt, military expenditure, and foreign direct investment on tourist arrivals (TA) in Sri Lanka over the period from 1981 to 2020, employing the nonlinear autoregressive distributed lag (NARDL) approach. The findings indicate that increases in terrorism incidence (positive shocks) exert a negative and statistically significant long-run effect on tourist arrivals, whereas decreases in terrorism incidence (negative shocks) have a positive influence on tourism inflows. Similarly, increases in external debt (positive shocks) positively affect tourist arrivals, while decreases in external debt (negative shocks) have an adverse impact. In contrast, both military expenditure and foreign direct investment are found to positively influence tourist arrivals in Sri Lanka. These results are further supported by the Frequency Domain Causality analysis. The study concludes by recommending that policymakers prioritize strengthening national security and intelligence cooperation to mitigate terrorism risks, thereby creating a safer environment for sustained tourism growth and foreign investment. It also emphasizes the importance of economic reforms, efficient management of external debt, and redirecting resources toward productive sectors—particularly tourism—to enhance the industry’s long-term resilience and competitiveness.</p>