Budget Economic and Fiscal Position Report 2026

BEFPR 2026 · file page 1

BUDGET, ECONOMIC AND FISCAL 
POSITION REPORT
Issued under Section 49 of the 
Public Financial Management Act, 
No. 44 of 2024
Ministry of Finance, Planning and Economic 
Development, Sri Lanka
November 7, 2025
2026

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i     
BUDGET, ECONOMIC AND FISCAL 
POSITION REPORT - 2026
Anura Kumara Dissanayake, 
Minister of Finance, Planning and Economic Development, 
Sri Lanka
November 07, 2025
Issued under the Public Financial Management Act, No. 44 of 2024 by the Hon. Minister 
of Finance, Planning and Economic Development.

BEFPR 2026 · file page 4

ii              
Printed at the Government Press, No. 118, Dr Danister De Silva Mawatha, Colombo 08, 
and published by the Ministry of Finance, Planning and Economic Development, The 
Secretariat, Colombo 01, Sri Lanka.

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iii     
CONTENTS
Page
Key Economic Indicators
vii
Reporting Requirements under the Public Financial Management Act, No. 44 of 2024
viii
Compliance - 2025
x
PART I
01. Medium-Term Fiscal Strategy Statement
         1.1 Overview
5
         1.2 Macro Fiscal Performance
9
         1.3 Fiscal Stratergy in the Medium Term
12
PART II
02. Fiscal Developments, Treasury Operations and Foreign Financing
         2.1 Overview 
23
         2.2 Government Revenue 
26
         2.3 Government Expenditure 
39
         2.4 Performance of the Cash Flow of the General Treasury 
42
         2.5 Management of Government Debt 
43
         2.6 Foreign Financing 
43
03. Economic Perspectives
         3.1 Overview 
49
         3.2 Economic Growth 
50
         3.3 Monetary Sector Developments 
59
         3.4 Stock Market 
62
         3.5 External Sector Developments
62
         3.6 World Economic outlook
66
04. Performance of State-Owned Enterprises
         4.1 Overview 
71
         4.2 Review of the 10 Major SOBEs
71
05. Basis Used for Preparation of 2026 Budget
         5.1 Overview 
79
         5.2 Gross Domestic Product 
79
         5.3 Consumer Prices 
79
         5.4 Employment and Unemployment 
79
         5.5 External Sector 
80
         5.6 Monetary Appregates 
80
         5.7 Revenue 
80
         5.8 Expenditure 
80
         5.9 Borrowings 
81
         5.10 Sensitivities to the Estimates 
81

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iv              
Page
TABLES
PART I
TABLE 1.1    Medium-Term Fiscal Framework: 2025 - 2030
15
PART II
TABLE 2.1 
Summary of Fiscal Operations
23
TABLE 2.2
Estimated and Actual Revenue and Expenditure - 2025
25
TABLE 2.3 
Summary of Performance of Government Revenue
28
TABLE 2.4
Performance of Income Tax
29
TABLE 2.5
Performance of VAT
30
TABLE 2.6 
Performance of Excise Duty
30
TABLE 2.7 
Motor Vehicle Imports and New Registration of Vehicles
32
TABLE 2.8
Coverage of Products and Value of Imports/Exports under Free Trade 
Agreements
32
TABLE 2.9 
CESS Revenue from International Trade
32
TABLE 2.10 Variance Analysis of Government Revenue
33
TABLE 2.11
Performance of Government Expenditure
39
TABLE 2.12
Behaviour of Yield Rates on Government Securities and Exchange Rate - 
(2024 to 2025)
40
TABLE 2.13
Welfare Expenditure 
41
TABLE 2.14
Government Treasury Cash Flow Operations
42
TABLE 2.15
Gross Domestic Borrowings January to August 2025
43
TABLE 2.16
Disbursements of Foreign Loans and Grants (January 2025 - August 2025)
44
TABLE 3.1 
Sectoral Composition of GDP at Constant (2015) Prices
51
TABLE 3.2 
Selected Indicators of Services Sector
57
TABLE 3.3 
Performance of Tourism Sector
58
TABLE 3.4 
Sectoral Distribution of GDP Growth (%)
59
TABLE 3.5
Consumer Price Inflation (Base : 2021=100)
61
TABLE 3.6 
Movements in Capital Market
62
TABLE 3.7
External Trade
65
TABLE 3.8
Key Indicators of World Economy - 2025 (Projections)
67
TABLE 4.1 
Composition of Electricity Generation and Capacity
73
TABLE 4.2 
Profitability of 52 State Owned Enterprises
75
TABLE 4.3 
Levy/Dividend Income from State Owned Enterprises
77
FIGURES
PART I
FIGURE 1.1 
Interest Payment as a % of Total Revenue
6
FIGURE 1.2 
Key Fiscal Aggregates 2022-2024
12

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v     
PART II
FIGURE 2.1
Composition of Total Revenue (%) - (January to August 2025)
27
FIGURE 2.2
Tax Revenue by Sources - (January to August 2025)
28
FIGURE 2.3 
Performance of Excise Duty - (January to August 2025)
30
FIGURE 2.4
Disbursements - 1st January to 31st August 2025, as per the Development 
Partners/ Lending Agencies (USD Mn.)
44
FIGURE 2.5
Disbursements from 1st January to 31st August 2025, as further the Major 
Economic Sector (USD Mn.)
45
FIGURE 3.1 
GDP Growth
49
FIGURE 3.2
Composition of GDP - First Half of 2025
49
FIGURE 3.3
Composition of Agriculture Sector - First Half of 2025
53
FIGURE 3.4
Composition of Industry Sector - First Half of 2025
55
FIGURE 3.5
Composition of Manufacturing Sector - First Half of 2025
55
FIGURE 3.6
Composition of Services Sector - First Half of 2025
56
FIGURE 3.7
Labour Force Participation Rate and Unemployment Rate
59
FIGURE 3.8
Yield Rates, Monetary Aggregates Money Supply and Private Sector 
Credit Growth
60
FIGURE 3.9
Movements in Headline, Core and Food Inflation
61
FIGURE 3.10 
Trade Balance and Exchange Rate Movements
63
FIGURE 3.11 
Composition of Exports
64
FIGURE 3.12
Composition of Imports
65
BOXES
BOX 1.1
Economic Impact of Shifting Age Structure and Increasing 
Dependency of Sri Lanka
8
BOX 2.1
Major Fiscal Measures: (January 2025 – September 2025)
36
ANNEXES
ANNEX I
The Outstanding List of Treasury Guarantees & Letters of Comfort Issued 
by the General Treasury up to 31.08.2025
83
ANNEX II 
Macroeconomic Indicators
85
ANNEX III
Assumptions for Revenue Estimates - 2025
93
Page

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vii     
Key Economic Indicators
Indicator
Period
Unit
             Value
2024
2025
REAL SECTOR
Economic Growth
First Half
%
4.6
4.8
   Agriculture
First Half
%
1.8
0.6
   Industry
First Half
%
10.5
7.9
   Services
First Half
%
2.3
3.3
Inflation (Year on Year) - CCPI (2021=100)
End Sep
%
-0.5
1.5
Inflation (Average) - CCPI (2021=100)
End Sep
%              2.4 
-1.4
Unemployment Rate
1st Quarter
%              4.5 
3.8
Labour Force Participation Rate
1st Quarter
%
            47.1 
49.7
FISCAL SECTOR
Budget Deficit
Jan-Aug
Rs. Bn.
911
411
Total Revenue
Jan-Aug
Rs. Bn.
         2,558 
        3,295 
    Tax Revenue
Jan-Aug
Rs. Bn.          2,349 
        3,068 
    Non Tax Revenue
Jan-Aug
Rs. Bn.
            209 
           226 
Total Expenditure
Jan-Aug
Rs. Bn.
          3,477 
         3,712 
   Recurrent Expenditure
Jan-Aug
Rs. Bn.
3,042
        3,381 
   Public Investment
Jan-Aug
Rs. Bn.
455
           339 
Government Debt
End Sep
Rs. Bn.
       28,563 
      29,635 
EXTERNAL SECTOR
Exports
Jan-Aug
USD Mn.          8,506 
        9,077 
    Agriculture Exports
Jan-Aug
USD Mn.
          1,804 
        2,030 
    Industrial Exports
Jan-Aug
USD Mn.
         6,666 
        7,015 
             Textile and Garments
Jan-Aug
USD Mn.
         3,365 
        3,595 
             Other
Jan-Aug
USD Mn.
         3,301 
        3,420 
Imports
Jan-Aug
USD Mn.
        12,073 
       13,341 
   Consumer Goods
Jan-Aug
USD Mn.
          2,176 
        3,295 
   Intermediate Goods
Jan-Aug
USD Mn.
          7,750 
        7,437 
      o/w Petroleum Products
Jan-Aug
USD Mn.          2,897 
        2,521 
   Investment Goods
Jan-Aug
USD Mn.
          2,140          2,597 
Trade Balance
Jan-Aug
USD Mn.
-3,566
-4,264
Tourist Arrivals
Jan-Aug
No.
1,362,668
1,566,523
Earnings From Tourism
Jan-Aug
USD Mn.
          2,167 
2,290
Workers' Remittances
Jan-Aug
USD Mn.
         4,288 
5,116
Portfolio Investments (Net)
End Jun
USD Mn.
-26
557
Overall Balance of Payments (BOP)
Jan-Jun
USD Mn.
1,761
522
Gross Official Reserves
End Aug
USD Mn.          5,654 
6,178
Exchange Rate (End Month)
End Sep Rs. per USD
299.36
302.61
Exchange Rate (Monthly Average)
Jan-Sep Rs. per USD
301.15
302.20
MONETARY SECTOR
Standing Deposit Facility Rate (SDFR) 
End Aug
%
           8.25 
7.25
Standing Lending Facility Rate (SLFR)
End Aug
%            9.25 
8.25
Statutory Reserve Ratio (SRR) 
End Sep
%
2.00
2.00
Commercial Bank Weekly Average 
Weighted Prime Lending Rate (AWPR)
End Aug
%
           9.13 
8.10
Weighted Average Yield Rate of Treasury 
Bills (91 Days)
End Aug
%            9.49 
7.58
Weighted Average Yield Rate of Treasury 
Bills (364 Days)
End Aug
%            10.01 
8.03
Growth in Money Supply (M2b)
Aug 2024/Aug 2025
%
9.3
10.7
Growth in Credit to the Private Sector
Aug 2024/Aug 2025
%
8.7
20.5

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viii              
Reporting Requirements
Under the Public Financial Management Act, No. 44 of 2024 (PFMA)
Section
Requirement
Purpose
Mode of Compliance
Section 11
Submission of the 
Fiscal 
Strategy 
Statement*  
To provide the Parliament 
and 
public 
with 
a 
formal 
statement 
of 
the 
Government’s 
fiscal 
strategy, provide strategic 
guidance for the upcoming 
annual 
budget, 
establish 
a basis upon which fiscal 
performance 
shall 
be 
evaluated 
objectively 
strengthen 
parliamentary 
oversight 
of 
performance 
against 
Government’s 
fiscal strategy and enhance 
fiscal 
transparency 
and 
accountability as per Section 
11(4) of the PFMA.
To be announced by the Minister 
of Finance at Parliament on or 
before thirtieth day of June 
of each Year upon obtaining 
the approval of the Cabinet of 
Ministers. The Fiscal Strategy 
Statement shall be published 
on the official website of the 
Ministry of the Minister of 
Finance.
Section 49
Submission of the 
Budget, 
Economic 
and Fiscal Position 
Report*
To provide information on 
all 
Government 
decisions 
and all other circumstances 
that may have material effect 
on the fiscal and economic 
position of the Government 
including 
the 
content 
specified 
under 
Section 
49(2) of the PFMA. 
To be tabled in Parliament 
by the Minister of Finance on 
the day fixed for the second 
reading of the Appropriation Bill 
in Parliament, in each year. The 
report shall be published on the 
official website of the Ministry 
of the Minister of Finance upon 
submission to Parliament.
Section 50
Submission of the 
Mid-Year 
Fiscal 
Position Report*
To provide a basis for the 
public 
to 
evaluate 
the 
Government’s Mid-year fiscal 
performance as against its 
fiscal strategy as set out in 
its statement including the 
content 
specified 
under 
Section 50(2) of the PFMA.
To be published in the website 
of the Ministry of the Minister 
of Finance, by the last day of 
the month of October of the 
relevant year or the lapse of ten 
months from the date of the 
passing of the Appropriation 
Act 
of 
the 
relevant 
year, 
whichever is later; and to be 
tabled in Parliament within 
two weeks of the date of such 
release or if Parliament is not 
sitting on the date of the release 
of the report, cause a copy of 
such report to be tabled within 
two weeks of the next sitting of 
Parliament.

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ix     
Section
Requirement
Purpose
Mode of Compliance
Section 51
Submission 
of 
the 
Final 
Budget 
Position 
Report 
(Annual Report) *
To provide a basis for the 
public 
to 
evaluate 
the 
Government’s annual fiscal 
performance as against its 
fiscal strategy as set out in 
its statement for the relevant 
financial year including the 
content 
specified 
under 
Section 51(2) of the PFMA.
To be published on the website 
of the Ministry of the Minister 
of Finance, not later than six 
months from the end of the 
financial year; and be tabled in 
Parliament within two weeks 
of the date of such release if 
Parliament is sitting on the date 
of the release of the final budget 
position report; or if Parliament 
is not sitting on the date of the 
release of the report, cause 
a copy of such report to be 
tabled in Parliament within two 
weeks of its next sitting.
Section 52
Submission 
of 
the 
Pre-election 
Budgetary Position 
Report **
To 
provide 
updated 
information to the public 
of the fiscal position of 
the country including the 
content 
specified 
under 
Section 52(2) of the PFMA.
To be released to the public 
within three weeks of the 
publication 
of 
proclamation 
or Order requiring the holding 
of a General Election to elect 
the members of Parliament; 
and placed before Parliament 
within two weeks of the first 
sitting of the new Parliament 
and be published in the official 
website of the Ministry of the 
Minister of Finance. The Minister 
of Finance shall, for the purpose 
of enabling the Secretary to the 
Treasury to prepare the report, 
disclose to the Secretary, details 
of all Government decisions and 
other 
circumstances, 
within 
his knowledge, which have, or 
could have material, fiscal or 
economic implications. 
Section 53
Submission 
of 
Reports on financial 
performance 
of 
the Ministry of the 
Minister of Finance*
To 
provide 
a 
statement 
on 
financial 
performance 
including 
revenue 
and 
expenditure, 
of 
the 
Government.
To be submitted to the Cabinet 
of Ministers and simultaneously 
published 
on 
the 
official 
website of the Ministry of the 
Minister of Finance, not later 
than forty-five days after the 
end of each quarter.
* By the Minister of Finance
** By the Secretary to the Treasury

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x              
Compliance – 2025
•	
Final Budget Position Report - 2025
As per the Section 51(1) of the Public Financial Management Act, No. 44 of 2024 (PFMA), the 
Final Budget Position Report was released to the public by the Minister of Finance as part of the 
Annual Report of the Ministry of the Minister of Finance on June 30, 2025. 
•	
Fiscal Strategy Statement - 2026
As per the Section 11(3) of the Public Financial Management Act, No. 44 of 2024 (PFMA), the Fiscal 
Strategy Statement (FSS) was announced by the Minister of Finance at Parliament on June 30, 
2025. The FSS was published on the official website of the Ministry of the Minister of Finance on 
June 30, 2025 with the announcement made by the Minister of Finance. 
•	
Mid-Year Fiscal Position Report – 2025
Status of the fiscal and economic position of the first six months of 2025 was released to the 
public on October 31, 2025 and was tabled in Parliament on November 07, 2025.
•	
The Budget, Economic and Fiscal Position Report – 2026 
This report contains the estimates related to the gross domestic product, consumer prices, 
employment and unemployment, balance of payment, revenue and expenditure and Government 
borrowing, the basis which has been used in the preparation of the aforementioned estimates, 
a statement relating to the sensitivity of the aforementioned estimates and the changes which 
may occur in connection with the economic or other basis used in preparation of such estimates, 
a statement, quantified as far as practicable, the risks that may have a material effect on the 
fiscal position among other information which was tabled in Parliament on November 07, 2025.

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xi     
Budget, Economic and Fiscal Position Report - 2026
This Report contains two parts: Part I presents the Medium Term Fiscal Strategy Statement 
and; Part II presents Information on all Government decisions and all other circumstances 
that may have material effect on the fiscal and economic position of the Government 
including the content specified in Section 49(2) of the Public Financial Management Act, 
No. 44 of 2024.

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01
Medium-Term Fiscal 
Strategy Statement

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Budget, Economic and Fiscal Position Report - 2026	
5   
1.1 Overview
Macroeconomic stability was restored in 
the first eight months of 2025, as evidenced 
by 
the 
macroeconomic 
indicators, 
supported by the implementation of 
decisive and far-sighted policy reforms 
by the Government.  The economy 
expanded by 4.8 percent of GDP in the first 
half of 2025.  Inflation turned positive in 
August and September 2025, after eleven 
months of deflation. The external sector 
remained resilient amidst US tariff policy 
uncertainties and geopolitical tensions. 
Gross official reserves reached USD 6.2 
billion at the end of September 2025. The 
tax-to-GDP ratio is expected to reach 14.8 
percent in 2025, with the highest primary 
surplus ever recorded in history, supported 
by domestic VAT collections, income taxes 
and, in particular, taxes on motor vehicles. 
The overperformance in the primary surplus 
target of 2.3 percent set by the International 
Monetary Fund (IMF) has helped reduce 
debt servicing costs while improving debt 
dynamics. The debt restructuring process 
has largely concluded towards achieving 
debt sustainability. The Government’s 
comprehensive anti-corruption drive has 
enhanced transparency and accountability, 
assuring 
a 
more 
predictable 
policy 
environment that supports faster economic 
recovery and stability.  
The Government has made remarkable 
strides in revitalizing Sri Lanka’s economy, 
political, and governance structures within 
a year since assuming office in September 
2024. Through steadfast commitment to 
swift reforms, it has not only met but often 
exceeded the expectations of citizens 
and international development partners. 
This unprecedented commitment of the 
Government has transformed Sri Lanka’s 
economic landscape into a new political 
and economic model within a remarkably 
short period. As such, all stakeholders of 
the economy are now reaping the benefits 
of these reforms, which are expected to 
bear fruit much more in the medium to 
long term. 
The Government remains fully committed to 
reducing corruption vulnerabilities, which 
have been identified as a major bottleneck 
for economic growth and prosperity. 
According to the extant literature, the 
reduction of corruption vulnerabilities has 
a positive effect on economic growth. 
Hence, the Government has embarked 
on a comprehensive series of reforms to 
ensure transparency and accountability in 
the areas of fiscal governance, Anti-Money 
Laundering and Countering the Financing of 
Terrorism (AML/CFT), the Anti-Corruption 
measures, and the rule of law. The 
Government has completed most of the key 
recommendations from the Governance 
Diagnostic Assessment (GDA) conducted 
by the IMF. The initiated governance 
reforms are expected to improve Sri Lanka’s 
income distribution and debt dynamics. 
The reforms cover fiscal governance, a 
merit-based and independent process for 
appointing members to the Commission 
to Investigate Allegations of Bribery or 
Corruption (CIABOC), an effective and 
publicly 
accessible 
asset 
declaration 
system, and a transparent procurement 
process. The asset declaration system 
has been enhanced to make declarations 
publicly accessible, publish non-filers, 
expand 
disclosure 
requirements, 
and 
provide more transparent account and 
asset information. The Proceeds of Crime 
Act, No. 5 of 2025, empowers authorities 
to freeze, confiscate, and manage criminal 
assets. 
The 
National 
Anti-Corruption 
Action Plan (NACAP) 2025–2029 outlines 
preventive, educational, and legal reforms, 
while the independence of the CIABOC 
has been strengthened. With the highest 
political support for the durable success of 
governance reforms, the expected benefits 
are likely to be sustained over the medium 
to the long term. 
Comprehensive 
fiscal 
and 
structural 
reforms have been implemented alongside 
targeted social support measures to cushion 
the burden on vulnerable populations 
due from the impact of the reforms. The 
Government increased the Aswesuma 
payments for low-income families and 
raised allowances for the elderly and 
kidney patients, along with the provision 
of stationery allowances for the school 
children of such families. This increased 
targeted assistance helped achieve social

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6                                                                      Budget, Economic and Fiscal Position Report - 2026
spending milestones under the Extended 
Fund Facility of the International Monetary 
Fund (IMF-EFF) for the first time, with the 
end-March 2025 target met and the end-
December 2025 target on track.  Such social 
spending is projected to reach Rs. 230 
billion or 0.7 percent of GDP by end-2025. 
Ongoing recertification of beneficiaries, 
targeted for completion by May 2026, will 
further enhance transparency, eliminate 
duplication, and ensure that benefits reach 
those most in need. Meanwhile, Mahapola 
scholarships and bursaries were enhanced 
to support students, reflecting a strong 
focus on human capital development. 
Social protection remains central to the 
reform agenda, and the National Social 
Protection Strategy will provide a long-
term, integrated framework for welfare 
delivery. In line with the Government’s 
commitment to uplift the livelihoods of 
the vulnerable population, total welfare 
expenditure, 
including 
all 
household 
subsidies including pensions, Aswesuma, 
fertilizer, 
pharmaceuticals 
increased 
significantly by 16.2 percent to Rs. 731.7 
billion in the first nine months of 2025 
compared to Rs. 629.8 billion in the same 
period of 2024.  
Fiscal consolidation efforts have yielded 
tangible results. Interest payments as 
a share of total revenue declined from 
79.1 percent in 2022 to 66.7 percent in 
2024, with projections to reach around 
42 percent by 2030. This improvement 
reflects 
robust 
revenue-enhancing 
measures and disciplined expenditure 
management. The primary surplus has risen 
steadily, supporting a decline in the central 
government debt-to-GDP ratio from 114.2 
percent in 2022 to 96.1 percent in 2024, 
with expectations to reach about 87.0 
percent by 2030. These achievements are 
expected to strengthen external balances, 
improved the current account position, 
eased domestic credit pressures, and 
restored confidence in fiscal sustainability. 
Transparent debt restructuring process and 
macroeconomic stability measures have 
improved sovereign ratings, enhanced 
creditworthiness, 
and 
strengthened 
investor confidence.
Ongoing revenue administration reforms, 
such as digitalization of the Inland Revenue 
Department, repeal of the SVAT scheme, 
establishment of a fully functional VAT 
refund mechanism for exporters, and 
enhanced risk-based audits of high-wealth 
individuals, are expected to improve tax 
compliance and fairness while avoiding 
tax evasions.  Digitalization of revenue 
administration at Sri Lanka Customs and 
the Excise Department is expected to 
increase tax compliance.  In addition, the 
Government has enacted the Gambling 
Regulatory Authority Act, No. 17 of 2025, 
establishing a framework to regulate 
gambling activities, strengthen revenue 
collection, and promote transparency, 
while supporting tourism, employment, 
and 
economic 
development 
through 
responsible and fair gambling practices.
Governance 
reforms 
have 
advanced 
significantly, particularly in State-Owned 
Enterprises 
(SOEs) 
restructuring 
and 
public asset management. The new SOE 
Law will strengthen oversight, enhance 
transparency, and improve accountability. 
Audited financial statements for 36 SOEs 
were published, and the remaining major 
SOEs have committed to publishing their 
audited statements annually by the end 
of June. The mandates of key SOEs will be 
clarified through Statements of Corporate 
Intent, and their Boards of Directors will be 
held accountable for delivering satisfactory 
results 
based 
on 
Key 
Performance 
Indicators (KPIs). Energy sector reforms 
include 
cost-recovery-based 
electricity 
pricing, unbundling of the Ceylon Electricity 
Board (CEB), strengthened regulatory 
oversight, and gradual settlement of 
legacy debts of CEB, CPC, and SriLankan 
Airlines. Measures were also taken to 
ensure that the Boards of Directors of 
Source : Department of Fiscal Policy
FIGURE 1.1 : Interest Payment as a % of 
Total Revenue
43.1 
36.9 
38.9 
39.0 
36.5 
36.2 
36.2 
40.2 
44.4 
47.7 
71.7 
72.0 
79.1 
80.5 
66.7 
66.7 
52.2 
49.7 
46.1 
44.6 
43.6 
41.8 
0
10
20
30
40
50
60
70
80
90
%

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Budget, Economic and Fiscal Position Report - 2026	
7   
State-Owned 
Banks 
(SOBs) 
have 
between nine and thirteen members, 
with independent directors forming the 
majority.
The Public Procurement Law and the 
Public Asset Management Bill are expected 
to modernize procurement and asset 
allocation, reducing inefficiencies and 
corruption. The Companies (Amendment) 
Act, 
No. 
12 
of 
2025 
introduced 
a 
beneficial ownership framework in line 
with international standards, improving 
corporate transparency and compliance.
The 
Government 
aims 
to 
attract 
approximately USD 2 billion in Foreign 
Direct Investment (FDI) in the coming year, 
focusing on strategic partnerships with 
China, India, Japan, and the United Arab 
Emirates (UAE). Investment incentives 
are expected to be granted through 
transparent and rule-based mechanisms 
under the amended Strategic Development 
Projects Act (SDP) and Colombo Port 
City Economic Commission Act. Through 
trade policy reforms including para-tariff 
rationalization, customs modernization, 
and export diversification, combined with 
the National Export Strategy and ongoing 
free trade negotiations, Sri Lanka will 
deepen its integration into regional and 
global markets.
Significant progress has been made in 
advancing the digital economy, including 
initiatives such as GovPay, the National 
Cyber Security Operations Centre, digital 
vouchers for schoolbooks and fertilizer, 
and online access to citizen documents via 
embassies. The rollout of 5G technology 
will transform connectivity, spur innovation, 
and enable the creation of advanced digital 
services. The Government envisions a fully 
cashless, paperless, and inclusive digital 
economy, improving access to services 
and growth opportunities for all citizens.
The Government is fully committed to 
achieving the objectives of the Economic 
Transformation Act, No. 45 of 2024, 
supported by focused and growth-driven 
amendments to the Act. Meanwhile, the 
Public Private Partnership Law is expected 
to introduce to create a legal framework 
for private sector active involvement in 
infrastructure and public services. The PPP 
law will streamline the process for public-
private projects, enhance transparency 
while attracting private capital for much 
needed priority areas of developments. The 
Government has already taken initiatives 
to promote inclusive growth, sustainable 
development, and economic resilience 
by targeting strong GDP growth, low 
unemployment, higher female labor force 
participation, 
export-oriented 
growth, 
sustainable fiscal balances, modernizing 
agriculture, expanding the digital economy, 
achieving net-zero emissions by 2050, and 
reducing poverty. 
Through these reforms, the Government 
targets a sustainable growth rate of 6–8 
percent over the medium term, driven 
by 
enhanced 
productivity, 
diversified 
exports, and a vibrant private sector. Labor 
market reforms aim to increase flexibility, 
encourage formal employment, and align 
education and vocational training with 
emerging 
industry 
needs, 
particularly 
in technology, manufacturing, logistics, 
and renewable energy. Investments in 
renewable energy, digital infrastructure, 
and innovation will expand the green 
economy while enhancing fiscal and 
environmental sustainability.
These comprehensive measures are laying 
the foundation for a resilient, inclusive, and 
forward-looking economy. By upholding 
fiscal discipline, strengthening institutions, 
and promoting broad-based growth, the 
Government is ensuring that every Sri 
Lankan benefits from the nation’s renewed 
growth momentum.

BEFPR 2026 · file page 22 printed page 8

8                                                                      Budget, Economic and Fiscal Position Report - 2026
BOX 1.1 : Economic Impact of Shifting Age Structure and Increasing Dependency of 
Sri Lanka
		(i)	 Introduction 
		
	 According to the "15th Census of Population and Housing 2024" conducted by the 
Department of Census and Statistics, the population of Sri Lanka increased to 21.8 
million people in 2024 from from 20.4 million people in 2012, reflecting the lowest 
average annual growth rate of 0.5 percent. This slowdown from the previous rate of 
0.7 percent highlights a significant demographic transition and indicates profound 
economic implications for the future.                                                                         
		(ii)	 Analysis 
		
	 The analysis highlights the trends in demographic transition and the subsequent 
economic challenges and opportunities.
Long-Term Demographic Transition of Sri Lanka (1946-2024)
		(a)	 Significant contraction of the youth base (0-14 years)
		
	 Figure 2 demonstrates a sharp and persistent decline in the proportion of children 
aged 0-14 years. The continuous fall in fertility rates, delayed marriages along with 
societal advancements such as improved education are the root causes of this 
demographic trend. Fewer children entering the population today is an indication 
of fewer entrants to the labour force in the coming decades. This results reduction 
of momentum of labour supply growth, which in turn constrains expansion of the 
overall economy, if not addressed by productivity enhancement. 
Age Group
Share in 
1946 (%)
Share in 
2024 (%)
Trend Analysis 
Economic Implications
Children                      
(0-14 years)
40-42%
≈20% Steady, Sharp 
contraction
Narrowing future labour supply
Working Age   
(15-59 years)
≈52%
≈61% Peaked, currently 
stabilizing
End of the Demographic Dividend 
and required to pay more attention to 
productivity enhancement
Elderly                     
(60+ years)
≈5%
≈18% Rapid, accelerating 
growth in post-2001 
Increasing old-age dependency will 
increase the burden on fiscal space
0
0.5
1
1.5
2
2.5
3
 -
 5.00
 10.00
 15.00
 20.00
 25.00
1871 1881 1891 1901 1911 1921 1931 1946 1953 1963 1971 1981 2001 20122024
%
Population (Millions)
Population
Growth
0
10
20
30
40
50
60
70
1946
1953
1963
1971
1981
2001
2012
2024
%
0-14 years
15-59 years
60 and over
Linear (0-14 years)
Linear (15-59 years)
Linear (60 and over )
Figure 1 : Size of the Population and Population 
Growth (1871 - 2024)
Figure 2 : Change in Age Structure (1946 - 2024)
Source : Department of Census and Statistics
Source : Department of Census and Statistics

BEFPR 2026 · file page 23 printed page 9

Budget, Economic and Fiscal Position Report - 2026	
9   
		
	
		(b)	 Stabilization of the working age population (15-59 years) 
		
	 Recent data from 2012 to 2024 demonstrates a distinct and consequential stabilizing 
trend in working-age population of Sri Lanka. This group accounted for 62.4 percent 
of the population in 2012 and slightly decreased to 61.3 percent in 2024. This 
stabilization trend confirms that Sri Lanka is nearing the end of its demographic 
dividend, which the country experienced from the 1960s to the 2000s. With the 
closure of demographic dividends, high savings, capital accumulation, and labour-
driven economic expansion will also diminish rapidly. Accordingly, immediate 
attention for structural modernization is required to minimize the risk of "Growing 
Old Before Becoming Rich."
	(c) 	 Acceleration of the Elderly Population (60+ years)
		
	 The share of the elderly population increased from a minimal 5 percent in 1946 
to nearly 18 percent in 2024. Figure 2 illustrates a sharply upward trajectory of 
elderly population growth, with a noticeable acceleration after 2001. This trend 
has been primarily driven by  increased life expectancy.  The feminization of aging, 
where women over 70 years of age continue to have higher longevity than men, 
is increasing over time, and this trend increases the long-term cost burden on the 
government, causing fiscal strains. The overall aging trend will substantially influence 
the economic landscape by increasing old-age dependency, reducing the labour 
force participation rate, and inflating future pensions and health care expenditure.
Conclusion 
		
	 The immediate challenge arising from this demographic shift is the rapid acceleration 
of the old age dependency ratio, which will place an unprecedented fiscal pressure 
on social security and healthcare systems, thereby threatening to erode national 
savings. Sri Lanka must urgently implement proactive and integrated reforms to 
achieve sustainable development and mitigate the structural slowdown posed by 
aging. Such reforms should include the deployment of underutilized female labour 
reserves, the recognition of care workers as essential economic infrastructure and 
the encouragement of strategic investments in emerging "age-driven marketplace 
focused entirely on the needs of seniors - silver economy".
BOX 1.1 : Economic Impact of Shifting Age Structure and Increasing Dependency of 
Sri Lanka (Contd..)
1.2 Macro-fiscal performance
The economy expanded by 4.8 percent 
in the first half of 2025 compared to the 
4.6 percent growth recorded in the same 
period of 2024. The growth was supported 
by positive performance across all major 
sectors: agriculture, industry, services, and 
taxes less subsidies. The agriculture sector 
marginally increased by 0.6 percent in the 
first half of 2025, compared to 1.8 percent 
growth in the same period of 2024. The 
industry sector expanded by 7.9 percent 
in the first half of 2025, compared to 
10.5 percent in the same period of 2024. 
Meanwhile, the services sector recorded 
moderate growth of 3.3 percent in the 
first half of 2025, compared to 2.3 percent 
recorded in the same period of 2024. 
Taxes less subsidies on products increased 
by 10.6 percent in the first half of 2025, 
compared to 6.4 percent in the same period 
of 2024. Sri Lanka's Purchasing Managers’ 
Index (PMI) for August 2025 reflected a 
notable expansion in the economy, with 
the Manufacturing PMI at 55.2, the Services

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10                                                                      Budget, Economic and Fiscal Position Report - 2026
PMI at 68.9, and the Construction PMI at 
61.1, highlighting strong growth across all 
three sectors. 
Global economic growth is expected to 
moderate in the near term, mainly due to 
the slowing of higher tariffs adjustments 
during the year, despite the high volatility 
in the long term. As such, the October 
2025 World Economic Outlook (WEO) 
has revised the global growth projections 
upward relative to the April 2025 WEO. 
Global growth is anticipated to slow to 3.2 
percent in 2025 and 3.1 percent in 2026, 
with growth expectations of around 1.5 
percent for advanced economies and 
above 4 percent for emerging market 
and developing economies. The global 
economy is heightened with uncertainty 
stemming from the US tariff and fiscal and 
financial vulnerabilities with higher debt 
accumulation and labour supply shocks 
hampering the anticipated growth.  Global 
inflation is expected to decline, with some 
variation across economies.  The October 
2025 WEO highlights the importance of 
having a sustainable policy in all areas 
with rebuilding fiscal buffers to withstand 
unforeseen shocks while doubling the 
ongoing structural reforms to restore 
confidence and face shocks. 
Sri Lanka continued its revenue-based fiscal 
consolidation process in 2025. Government 
revenue improved significantly in the first 
eight months of 2025, driven by higher 
revenue collections from Value Added Tax 
(VAT), income taxes, and taxes on motor 
vehicles. This impressive revenue collection 
was primarily driven by the impact of 
tax policy reforms together with the 
implementation of administrative reforms, 
and rise in economic activities and the 
enforcement of anti-corruption measures, 
including digitalization initiatives by the 
three key revenue-collecting agencies. 
Efforts were made to enhance revenue 
mobilization by tracking and monitoring 
the performance of the IRD through the 
introduction of Key Performance Indicators 
(KPIs), such as risk-based audits, audit 
effectiveness, 
increased 
compliance 
measures for High Worth Individuals 
(HWI) unit, tax return filing compliance 
among large and non-large taxpayers, 
management of collectible debt, and 
VAT registration.  The IRD, Sri Lanka 
Customs, and the Excise Department have 
introduced 
significant 
anti-corruption 
initiatives 
to 
strengthen 
institutional 
integrity and transparency. The IRD has 
introduced automation and digitalization, 
adopted a formal code of conduct, and 
enhanced its risk management capacity. Sri 
Lanka Customs has implemented targeted 
reforms, including the introduction of the 
Automated Risk Management System, 
establishment of internal oversight units, 
and development of digital platforms 
such as the CUSDEC Tracking System and 
Vehicle Verification Portal. Meanwhile, the 
Excise Department, in collaboration with 
the CIABOC, has undertaken coordinated 
measures such as appointing an integrity 
officer, launching awareness programmes, 
and 
establishing 
internal 
affairs, 
risk 
management, and financial investigation 
units. 
The Simplified VAT (SVAT) system was 
repealed with effect from October 01, 
2025, shifting to a standard VAT refund 
process for eligible exporters and their 
suppliers to improve VAT compliance. 
With the continuation of the compliance 
improvement programme in the first 
eight months of 2025, the number of VAT 
registrations increased by 44.5 percent to 
31,134 by end-September 2025, from 21,542 
at end-December 2024. Registrations of 
resident and non-resident companies also 
improved by 18.2 percent, reaching 118,678 
by end-September 2025, compared to 
100,409 at end-December 2024.
Government revenue, including grants, 
increased by 28.7 percent in the first eight 
months of 2025 to Rs. 3,301.5 billion from 
Rs. 2,565.9 billion in the same period of 2024. 
The tax revenue collection significantly 
improved to Rs. 3,068.5 billion, exceeding 
the QPC set under the IMF-EFF Programme 
for end-September 2025 by Rs. 318 billion. 
Revenue from income taxes increased by 
12.4 percent to Rs. 702.4 billion in the first 
eight months of 2025, from Rs. 624.7 billion 
in the same period of 2024. This was a 60.2 
percent realization of the annual revenue 
estimate. Revenue from taxes on goods

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Budget, Economic and Fiscal Position Report - 2026	
11   
and services increased by 36.4 percent to 
Rs. 1,939.1 billion in the first eight months 
of 2025, from Rs. 1,421.3 billion in the same 
period of 2024. This was mainly due to the 
increase in revenue collected from VAT by 
28.7 percent to Rs. 1,084.2 billion and the 
increase in revenue collected from Excise 
Duty 
(Special 
Provisions) 
particularly 
on motor vehicles by 57.6 percent to 
Rs. 607.9 billion which surpassed the 
full-year excise duty revenue target of 
Rs. 598.5 billion. The receipts from taxes on 
external trade increased by 41.2 percent to 
Rs. 427.0 billion. VAT on domestic activities 
increased by 21.1 percent to Rs. 567.5 
billion in the first eight months of 2025, 
from Rs. 468.8 billion in the same period 
of 2024 due to the resumption of domestic 
economic activities. VAT revenue from 
imports increased significantly by 38.3 
percent to Rs. 516.8 billion in the first eight 
months of 2025, from Rs. 373.7 billion in the 
same period of 2024. This increase in VAT 
revenue on imports was primarily driven 
by the higher VAT revenue collection from 
imported vehicles, following the removal 
of import restrictions on all categories of 
vehicles with effect from February 1, 2025. 
Revenue from excise duty on motor 
vehicles increased significantly by 234.0 
billion to Rs. 270.5 billion in the first eight 
months of 2025, from Rs. 36.5 billion in 
the same period of 2024, following the 
lifting of import restrictions on motor 
vehicles. Revenue from import duties 
increased remarkably by 117.5 percent to 
Rs. 151.0 billion in the first eight months 
of 2025, from Rs. 69.4 billion in the same 
period of 2024. Revenue from the Ports 
and Airports Development Levy (PAL) and 
the Commodity Export Subsidy Scheme 
(CESS) increased by 1.7 percent to Rs. 115.9 
billion and 8.8 percent to Rs. 56.5 billion, 
respectively. The increase in revenue from 
PAL was primarily due to higher import 
volumes. The increase in CESS revenue was 
driven by the removal of import restrictions 
on CESS-levied items and the increase in 
CESS rates on selected imported goods. 
Revenue from non-tax sources increased 
moderately by 8.1 percent to Rs. 226.2 
billion in the first eight months of 2025, 
from Rs. 209.3 billion in the same period of 
2024. This was a 61.1 percent realization of 
the annual revenue estimate. 
Government 
expenditure 
increased 
marginally by 6.8 percent to Rs. 3,712.5 
billion in the first eight months of 2025, 
from Rs. 3,476.9 billion in the same 
period of 2024. Government expenditure 
remained on track, achieving a 51.6 
percent execution rate against the annual 
estimate of Rs. 7,190.0 billion for 2025. 
Recurrent expenditure, which accounted 
for approximately 91 percent of total 
expenditure, increased by 11.2 percent to 
Rs. 3,381.3 billion in the first eight months 
of 2025 from Rs. 3,041.6 billion in the 
same period of 2024.  Interest payments 
increased moderately by 8.2 percent to 
Rs. 1,466.5 billion in the first eight months 
of 2025, from Rs. 1,559.7 billion in the 
same period of 2024. Interest payments 
on domestic borrowing in the first eight 
months of 2025, which constituted 87 
percent of total interest expenditure, 
increased slightly by 0.5 percent to Rs. 
1,687.6 billion, while interest payments on 
foreign borrowing increased significantly 
by 121.1 percent to Rs. 221.1 billion in the 
first eight months of 2025. The significant 
increase in interest payments on foreign 
borrowings was mainly driven by the 
resumption of actual interest payments on 
loans from the China Development Bank, 
the Government of Japan, the Export-
Import Bank of India, and International 
Sovereign Bonds (ISBs) following debt 
restructuring.  Expenditure on salaries and 
wages of public servants increased by 15.3 
percent to Rs. 760.7 billion in the first eight 
months of 2025, due to the basic salary 
revision implemented in the public sector 
with effect from April 1, 2025.  Expenditure 
on goods and services increased slightly 
by 6.1 percent to Rs. 210.6 billion in the first 
eight months of 2025, from Rs. 198.6 billion 
in the same period of 2024. 
The Government recorded a primary 
surplus of Rs. 1,276.5 billion in the first 
eight months of 2025, surpassing the end-
September 2025 Quantitative Performance 
Criterion (QPC) of Rs. 300 billion set under 
the IMF-EFF Programme, and expanded by 
Rs. 627.8 billion, from Rs. 648.8 billion in 
the same period of 2024. The Government 
intends to maintain the budget deficit 
around 5.1 percent of GDP in 2026, to ensure

BEFPR 2026 · file page 26 printed page 12

12                                                                      Budget, Economic and Fiscal Position Report - 2026
sustained macroeconomic stability. The 
budget deficit, in nominal terms, narrowed 
to Rs. 411.0 billion in the first eight months 
of 2025, from Rs. 911.0 billion in the same 
period of 2024, reflecting the success of 
revenue-based fiscal consolidation and 
expenditure rationalization.  In the medium 
term, the primary balance and overall 
balance are expected to improve with the 
full implementation of revenue-based fiscal 
consolidation measures and the expected 
completion of the debt restructuring 
process. Due to restricted access to 
international 
financial 
markets, 
the 
Government primarily relied on domestic 
sources to finance the fiscal deficit. Net 
domestic financing amounted to Rs. 462.9 
billion and net foreign financing amounted 
to minus Rs. 51.8 billion in the first eight 
months of 2025 due to the exceeding 
repayments over disbursments. Public 
investment will be strategically prioritized 
in the medium term in alignment with the 
Public Financial Management (PFM) Law, 
incorporating 
recommendations 
from 
the IMF’s Public Investment Management 
Assessment (PIMA) to enhance efficiency 
and support sustainable growth. 
Outstanding central government debt 
increased by 5.2 percent to Rs. 30,928 
billion as at end September, 2025 compared 
to Rs. 29,402 billion recorded as at end 
September 2024. The total outstanding 
domestic debt increased by 9.5 percent to 
Rs. 19,660 billion, whereas the outstanding 
foreign debt fell by 1.6 percent to Rs. 11,268 
billion by the end of September 2025 
compare to end of September 2024. 
percent in September and 2.1 percent in 
October 2025, following nearly a year of 
deflation. The inflation was largely driven 
by a gradual recovery of demand due to 
accomodating monetary policy stance, 
and increase in food inflation. Headline 
inflation, as measured by the year-on-year 
change in the Colombo Consumer Price 
Index (CCPI, 2021=100), increased to 2.1 
percent in October 2025 from 1.5 percent 
in September 2025, following 11 months of 
deflation. Food inflation (Y-o-Y) accelerated 
to 2.9 percent in September 2025, while 
non-food inflation (Y-o-Y) remained steady 
at 0.7 percent. Given the country’s positive 
economic outlook, inflation is projected to 
move towards its target.
In January 2025, the Central Bank of Sri Lanka 
(CBSL) decided to maintain the Overnight 
Policy Rate (OPR) at 8.00 percent, where it 
had remained since November 2024. In May 
2025, the OPR was reduced by 25 bps to 
7.75 percent, thus easing monetary policy 
further. Accordingly, the Standing Deposit 
Facility Rate (SDFR) and the Standing 
Lending Facility Rate (SLFR), which are 
linked to the OPR with pre-determined 
margins of ± 50bps, were reduced to 7.25 
percent and 8.25 percent, respectively. 
The policy rate has since been maintained 
at this level, as the current monetary stance 
is deemed consistent with guiding inflation 
towards the 5 percent medium-term target 
while supporting the ongoing economic 
recovery.
Reflecting significant progress in debt 
restructuring and improvements in macro-
fiscal performance, Sri Lanka’s sovereign 
credit ratings were upgraded by the 
three major international credit rating 
agencies. Fitch Ratings, Moody’s Investors 
Service, and S&P Global Ratings raised the 
country’s ratings to CCC+, Caa1, and CCC+, 
respectively, signaling enhanced investor 
confidence and a positive outlook on the 
nation’s fiscal and economic management.
1.3 Fiscal Strategy in the Medium Term
The fiscal operations of the Government 
are governed by the Public Financial 
Management Act, No. 44 of 2024 (PFMA), 
which came into effect in August 2024. 
FIGURE 1.1 : Key Fiscal Aggregates 2022-2024
Source : Department of Fiscal Policy
The Sri Lankan rupee depreciated by 
3.3 percent year-to-date against the 
US dollar as of end-September 2025. 
Inflation has turned positive recording 1.5 
7.3 
(3.7)
(10.2)
9.9 
0.6
(8.3)
12.4 
2.2 
(6.8)
 (15.0)
 (10.0)
 (5.0)
 -
 5.0
 10.0
 15.0
Government Tax Revenue
Primary Balance
Budget Deficit
2022
2023
2024

BEFPR 2026 · file page 27 printed page 13

Budget, Economic and Fiscal Position Report - 2026	
13   
Full implementation of the PFMA is 
expected to be completed by the end of 
December 2025 with the publication of 
PFM regulations. The Act provides a legal 
framework to achieve key objectives such 
as maintaining public debt at a sustainable 
level, 
building 
and 
preserving 
fiscal 
buffers to safeguard against future shocks, 
managing and mitigating fiscal risks, and 
ensuring discipline, transparency, and 
accountability 
in 
fiscal 
management. 
Further, it mandates a legally binding 
requirement of publication of an annual 
fiscal strategy statement and a rolling five-
year medium-term fiscal framework.
The debt reduction objective of the Act 
is monitored through the primary balance 
target and the primary expenditure ceiling 
set at below 13 percent of GDP, which will 
be established under the medium-term 
fiscal framework in the Fiscal Strategy 
Statement. 
By 
managing 
non-interest 
expenditure, this framework ensures fiscal 
discipline and allows revenue-enhancing 
measures to strengthen the primary 
balance and support debt reduction.
Government revenue is projected to 
exceed 15.9 percent of GDP in 2025, while 
government expenditure is projected to 
remain around 20.5 percent of GDP. Hence, 
it is expected to achieve a primary balance 
of around 3.8 percent of GDP and to contain 
the budget deficit to 4.5 percent in 2025.
1.3.1 Fiscal Strategy
The Government’s fiscal strategy is guided 
by the Medium-Term Fiscal Framework 
(2025–2030), as outlined in the Fiscal 
Strategy Statement 2026 and governed 
by the fiscal rules stipulated under the 
PFMA. The Government is committed to 
achieving a primary surplus of not less 
than 2.3 percent of GDP in 2026. To this 
end, the Government has implemented 
several 
revenue 
measures 
aimed 
at 
raising 
government 
revenue 
to 
15.1 
percent of GDP in 2025 as per the budget 
estimates. However, owing to the effective 
implementation of these measures and 
higher than expected revenue from motor 
vehicle imports, the Government has 
revised its 2025 revenue estimate upward 
from 15.1 percent of GDP to 15.9 percent 
of GDP. Despite these improvements, 
government revenue is projected to 
remain at 15.4 percent of GDP in 2026, 
while the primary surplus is expected to 
stay at least 2.3 percent of GDP. A number 
of measures are already underway to 
strengthen tax administration, focusing 
on increasing tax compliance, reducing 
corruption vulnerabilities, digitalization and 
modernization of tax administration, and 
effective management and governance, 
thereby 
augmenting 
the 
government 
revenue over the medium term.
While 
enhancing 
the 
government 
revenue, the Government is committed to 
maintaining prudent levels of government 
spending and primary expenditure below 
13 percent of GDP in line with the PFMA. 
The 
Government 
has 
committed 
to 
ensuring that adequate funds are allocated 
to key priority sectors of the economy 
while strengthening the social safety nets 
programme. The fiscal strategy will be 
supported by overall economic stabilization 
measures including pro-growth measures, 
ensuring price and financial stability, and 
strengthening governance. 
The Government remains committed to 
restoring debt sustainability in line with 
the debt sustainability targets under the 
IMF-EFF Programme. The Government has 
concluded all components of the Domestic 
Debt Optimization while the External Debt 
Restructuring (EDR) process is nearing 
completion. In 2025, Sri Lanka achieved 
significant 
progress 
in 
public 
debt 
management with the establishment of the 
Public Debt Management Office (PDMO) 
under the Public Debt Management Act, 
No. 33 of 2024. The PDMO published 
the 
Medium-Term 
Debt 
Management 
Strategy (MTDS) for 2025–2029, outlining 
the 
Government's 
Annual 
Borrowing 
Plan (ABP) and strategic direction over 
the medium term. The revised MTDS and 
ABP are submitted with the budget 2026. 
The 
medium-term 
debt 
management 
strategy emphasizes limiting new external 
borrowings to bilateral and multilateral 
sources, while strengthening domestic 
financing. 
Following 
the 
successful

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14                                                                      Budget, Economic and Fiscal Position Report - 2026
completion of debt restructuring with the 
Official Creditor Committee in June 2024, 
Sri Lanka finalized bilateral agreements with 
its major creditors in late 2024 and early 
2025. As a result, disbursements for foreign-
funded projects by some of the bilateral 
lenders have commenced. Throughout 
this period, multilateral funding continued 
uninterrupted, providing stable support for 
the country’s financing requirements.
As per Section 11 (3) of the PFMA, the Fiscal 
Strategy Statement, including the Medium-
Term Fiscal Framework, was published 
on June 30, 2025, to provide a strategic 
roadmap for the preparation of Budget 
2026.
The fiscal path for 2025 – 2030 and the 
macroeconomic direction towards fiscal 
sustainability are indicated below:
Fiscal Path:
-	
Achieving a primary surplus of at 
least 2.3 percent of GDP in 2025 and 
in subsequent years through strong 
revenue-enhancing 
efforts 
and 
rationalizing government expenditure.
-	
Increasing revenue to GDP ratio above 
	
15 percent of GDP in 2025 and beyond 
through 
tax 
policy 
reforms 
and 
strengthening of tax administration. 
-	
Changing direct-to-indirect tax ratio 
from 25:75 to 40:60 over the medium 
term to long term in line with the 
standards of the emerging and medium 
income countries.
-	
Improving tax compliance of core taxes, 
especially through the Value Added 
Tax (VAT) compliance improvement 
programme and establishment of a 
fully functional VAT refund system to 
ensure the full repeal of the Simplified 
VAT (SVAT) system.  
-	
Monitoring 
the 
Inland 
Revenue 
Department under Key Performance 
Indicators (KPIs) related to payment, 
filing, reporting and registration.
-	
Modernizing 
the 
Inland 
Revenue 
Department by introducing the RAMIS 
3.0.
-	
Managing primary expenditure below 
the 
primary 
expenditure 
ceiling 
set under the Medium-Term Fiscal 
Framework, which needs to be below 
13 percent of GDP as per the PFMA.
-	
Continuing to strengthen the Social 
Safety Net Programmes to provide 
relief to the most vulnerable segments 
of society.
-	
Maintaining public investment of over 4 
percent in 2026 and beyond.
-	
Carefully prioritizing public investment 
and 
selection 
of 
projects 
and 
programmes to be funded under 
the 
budget, 
while 
ensuring 
that 
expenditure is adequately allocated 
for priority sectors such as health, 
education, infrastructure, and social 
protection. 
-	
Use ITMIS to make central government 
payments; 
cheque 
payments 
and 
electronic funds transfers by 2026, and 
integrate the e-GP system with ITMIS, 
when the system is ready.
-	
Integrate 
revenue 
administration 
systems at IRD, Customs and proposed 
RASED at the Excise Department to the 
ITMIS.
-	
Containing budget deficit gradually 
to be less than 5 percent of GDP from 
2026 and beyond and thereby reduce 
the gross financing needs of the 
Government.
-	
Eliminating the accumulation of arrears 
over 3 months as per the arrears 
clearance strategy. 
-	
Reducing the issuance of government 
guarantees to maintain the aggregate 
stock 
of 
outstanding 
Government 
guarantees at the end of each financial 
year to not exceed 7.5 percent of the

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Budget, Economic and Fiscal Position Report - 2026	
15   
average GDP of the relevant financial 
year and preceding two financial 
years with a view to limiting fiscal 
risks 
emanating 
from 
government 
guarantees. 
-	
Continuing the implementation of 
automatic fuel and electricity pricing 
mechanisms to ensure sound financial 
performance 
of 
Ceylon 
Electricity 
Board (CEB) and Ceylon Petroleum 
Corporation (CPC).
-	
Carrying out structural reforms of the 
State-Owned Enterprises (SOEs) to 
improve their financial viability and 
strengthen their governance.
-	
Maintaining an inflation target at 5 
percent over the medium term, as 
announced by the Central Bank of Sri 
Lanka.
As outlined above, the fiscal path is 
primarily 
based 
on 
revenue 
raising 
strategies focusing on tax policy, revenue 
administration and prudent management 
of government expenditure. The fiscal 
outlook will 
be 
supported 
by 
SOE 
restructuring efforts, a strong institutional 
framework, digitalization and integration 
of digital systems and data, improved 
governance and growth and the stability 
of the economy.
1.3.2 Medium Term Fiscal Framework
The Medium-Term Fiscal Framework rests 
on the following:
-	
Increasing 
government 
revenue 
exceeding 15 percent of GDP in 2025 
and increasing it over the medium 
term. 
-	
Maintaining primary expenditure under 
13 percent of GDP and maintaining 
public investments over 4 percent of 
GDP.
-	
Achieving a primary surplus of at least 
2.3 percent in 2025 and maintaining 
the same level or above over time.
TABLE 1.1 : Medium-Term Fiscal Framework 2025-2030
As a percentage of GDP
Indicator
2024
2025
2025
2026
2027
2028
2029
2030
Provisional
Budget
Revised
Projection
Total Revenue & Grants
          13.7        15.1        15.9 
15.4 
15.5 
15.5 
15.5 
15.5 
Total Revenue
          13.5        15.0        15.9 
15.3 
15.4 
15.4 
15.4 
15.5 
Tax Revenue
          12.4        13.9        14.8 
14.2 
14.4 
14.4 
14.3 
14.4 
Income Tax
           3.4          3.5          3.5 
3.5 
3.6 
3.6 
3.6 
3.7 
Taxes on Goods & 
Services
           7.4 
8.4          9.2 
8.9 
8.9 
8.9 
8.7 
8.7 
Taxes on External Trade
           1.6 
2.0          2.0 
1.9 
1.9 
1.9 
2.0 
2.0 
Non-Tax Revenue
           1.1          1.1 
         1.1 
1.0 
1.0          1.1 
1.1 
1.1 
Grants
           0.2          0.1          0.1 
0.1 
0.1 
0.1 
0.1 
0.1 
Total Expenditure
          20.5        21.8        20.5 
20.5 
20.0 
19.8 
19.6 
19.4 
Recurrent
          17.9        17.8 
       17.3 
16.5 
15.9 
15.7 
15.5 
15.2 
Salaries & Wages
           3.6          3.7          3.8 
3.8 
3.8 
3.8 
3.8 
3.8 
Goods & Services
           1.2          1.3          1.2 
1.2 
1.2 
1.2 
1.2 
1.2 
Interest
           9.0          8.9          8.3 
7.6 
7.1 
6.9 
6.7 
6.5 
Subsidies & Transfers
           4.1          3.9          4.0 
3.9 
3.8 
3.8 
3.7 
3.7 
Capital and net lending
           2.6 
4.0          3.2 
4.0 
4.0 
4.1 
4.2 
4.2 
o/w Public Investments
           2.7 
4.0          3.2 
4.0 
4.1 
4.1 
4.2 
4.2 
Current Account Balance
          (4.4)
(2.8)        (1.4)
(1.2)
(0.5)
(0.3)
(0.0)
0.3 
Primary Balance
           2.2 
2.3          3.8 
2.5 
2.6 
2.6 
2.6 
2.6 
Budget deficit
          (6.8)
(6.7)
(4.5)
(5.1)
(4.5)
(4.3)
(4.1)
(3.8)
Sources : Department of Fiscal Policy, Department of National Budget, International Monetary Fund (IMF) 
Programe Parameters.

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16                                                                      Budget, Economic and Fiscal Position Report - 2026
-	
Containing the budget deficit to less 
than 5 percent of GDP by 2026 and 
beyond.
-	
Reducing central government debt 
gradually to bring down the debt to a 
sustainable level from 96.8 percent of 
GDP in 2026 to 87 percent of GDP in 
2030.
1.3.3 Justification of Deviations from the 
Fiscal Framework Target
Government Revenue:
The target was to increase government 
revenue to 15 percent of GDP in 2025 and 
continue its growth over the medium 
term. The table 1.1 shows that the revised 
revenue estimate for 2025 has increased to 
15.9 percent of GDP, exceeding the initial 
budget target. This positive deviation 
is attributable to higher-than-expected 
performance in tax revenue, particularly 
from goods and services (9.2 percent of 
GDP) and motor vehicle imports, reflecting 
effective revenue measures and compliance 
improvements. The upward revision aligns 
with efforts to broaden the tax base and 
strengthen revenue administration.
Primary Surplus: 
The framework aimed for a primary surplus 
of 2.3 percent of GDP in 2025. The revised 
table shows a primary surplus of 3.8 
percent of GDP for 2025, exceeding the 
target. This positive deviation is largely due 
to higher revenue mobilization combined 
with low execution of capital expenditure, 
indicating stronger than expected fiscal 
performance.
Budget Deficit:
The goal was to contain the budget 
deficit below 5 percent of GDP by 2026. 
The revised deficit for 2025 stands at 4.5 
percent of GDP, reflecting accelerated 
fiscal consolidation. Early attainment of this 
target demonstrates the effectiveness of 
revenue enhancing measures and prudent 
management of expenditure.

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Budget, Economic and Fiscal Position Report - 2026	
3   
Budget, Economic and Fiscal Position Report - 2026
Issued by the Hon. Minister of Finance, Planning and Economic Development
Under Section 49 of the Public Financial Management Act, 
 No. 44 of 2024
This Report is issued under Section 49 of the Public Financial Management Act, No. 44 of 
2024, which is required to be tabled in Parliament by the Minister of Finance on the day 
fixed for the second reading of the Appropriation Bill in Parliament, in each year.
It includes estimates relating to gross domestic product, consumer prices, employment and 
unemployment, balance of payments, revenue and expenditure, Government borrowing, 
basis used to prepare the aforementioned estimates among others. The information 
contained in this report takes into account, as far as possible, all Government decisions and 
all other circumstances that may have material effect on the fiscal and economic position 
of the Government.

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02
Fiscal 
Developments, 
Treasury 
Operations and 
Foreign Financing

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Budget, Economic and Fiscal Position Report - 2026	
23   
2.1 Overview 
The 
government’s 
fiscal 
operations 
noticeably improved in the first eight 
months of 2025, due to the impressive 
growth in government revenue, aided 
by the implementation of far-sighted 
policy reforms, coupled with the prudent 
management of government recurrent 
expenditure, 
rejuvenated 
by 
the 
anti-corruption drives of the government. 
However, execution of capital expenditure 
remained low due to the conduct of 
budgetary operations in the first four 
months under the Vote on Account. The 
primary surplus in the Budget has improved 
significantly to Rs. 1,276.5 billion in the first 
eight months of 2025, from Rs. 648.8 billion 
in the same period of 2024, surpassing the 
Quantitative Performance Criterion (QPC) 
for the primary balance September target 
of Rs. 300 billion set under the Extended 
Fund Facility of the International Monetary 
Fund (IMF-EFF) Programme.  The increased 
primary 
surplus 
helped 
cushion 
the 
borrowing constraint of the government, 
keeping a large buffer for debt service 
payments. The primary surplus is expected 
to exceed the 2025 target of 2.3 percent of 
GDP, which will ensure a path towards long-
term debt sustainability. While improving 
debt dynamics, the overall budget deficit 
reduced by 54.9 percent to Rs. 411.0 billion 
in the first eight months of 2025, from 
Rs. 911.0 billion in the same period of 2024. 
The total government revenue, including 
grants increased by 28.7 percent to 
Rs. 3,301.5 billion in the first eight months 
of 2025, from Rs. 2,565.9 billion in the same 
period of 2024. This was a 66.2 percent 
achievement against the annual estimate of 
Rs. 4,990 billion. The tax revenue increased 
by 30.7 percent to Rs. 3,068.5 billion while 
non-tax revenue increased by 8.1 percent 
to Rs. 226.2 billion in the first eight months 
of 2025. 
The surge in government revenue in the 
first eight months of 2025 was mainly 
driven by the increase in VAT revenue, 
TABLE 2.1 : Summary of Fiscal Operations
Rs. Mn.
Item
Jan. - Aug.
2024
2025 (a)
Revenue and Grants
2,565,921
3,301,459
Revenue
2,557,792
3,294,740
 Tax
2,348,529
3,068,495
 Non Tax
209,263
226,244
Grants
8,129
6,720
Expenditure
3,476,885
3,712,492
Current
3,041,565
3,381,309
Salaries
659,502
760,687
Interest Payments
1,559,721
1,687,571
Other
822,342
933,051
Public Investments
454,744
338,846
Other
-19,424 
-7,663 
Revenue Deficit (-)/Surplus (+)
-483,773
-86,569
Primary Deficit (-)/Surplus (+)
648,757
1,276,538
Overall Budget Deficit (-)/Surplus (+)
-910,965
-411,033
Financing
910,965
411,033
Foreign Financing (Net)
168,551 
-51,849
Domestic Financing (Net)
742,414
462,882
Source: Department of Fiscal Policy
(a) Provisional

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24                                                                      Budget, Economic and Fiscal Position Report - 2026
income 
taxes, 
and 
taxes 
on 
motor 
vehicles, with a comprehensive tax policy 
and 
administrative 
measures 
geared 
towards broadening the tax base. Total 
tax revenue increased by 30.7 percent to 
Rs. 3,068.5 billion in the first eight months 
of 2025 from Rs. 2,348.5 billion in the 
same period of 2024. This has surpassed 
the end September tax revenue QPC of 
Rs. 2,750 billion by Rs. 318.5 billion set under 
the IMF-EFF programme. The improved 
revenue was supported by the expansion 
of economic activities of the country, 
together with policy and administrative 
adjustments conducted in the first eight 
months of 2025. Revenue from VAT 
increased by 28.7 percent to Rs. 1,084.2 
billion in the first eight months of 2025, 
from Rs. 842.5 billion in the same period 
of 2024. VAT accounted for 35.3 percent of 
total tax revenue representing the largest 
share and this growth was largely driven 
by the resumption of domestic economic 
activities, the full impact of the VAT rate 
increases from 15 percent to 18 percent 
and the reduction of the VAT registration 
threshold from Rs. 80 million to Rs. 60 
million per annum, and higher VAT revenue 
collection from imported motor vehicles 
following the removal of import restrictions. 
With a 22.9 percent share of total tax 
revenue, income tax was the second-
largest contributor, followed by excise 
taxes, which accounted for 19.8 percent 
of total tax revenue. The revenue from 
income tax increased due to the expansion 
of economic activities,  the salary hikes in 
the informal private sector followed by the 
increase in compliance stemming from the 
strengthening tax administration at the 
Inland revenue Department (IRD). Revenue 
from excise taxes increased due to higher 
revenue collections from motor vehicles, 
liquor, and other excisable articles.
In 2025, the IRD, Sri Lanka Customs, and 
the Department of Excise continued with 
implementation of major administrative 
reforms to enhance revenue mobilization, 
compliance, transparency, and to reduce 
corruption vulnerabilities. In addition, these 
three key revenue-collecting agencies have 
undertaken anti-corruption measures in 
line with the IMF reform agenda. Quarterly 
progress reports on the implementation 
of the measures undertaken to reduce 
corruption 
vulnerabilities 
have 
been 
published on the Ministry of  Finance 
website since in August 2025. The IRD has 
implemented 
anti-corruption 
measures 
such as automation and digitalization, the 
development, and adoption of a formal 
code of conduct, and the enhancement of 
capacity of the existing risk management 
unit. Sri Lanka Customs implemented 
several targeted anti-corruption measures, 
including 
the 
development 
of 
the 
Automated 
Risk 
Management 
System 
(ARMS), establishment of an internal affairs 
unit, establishment of a digitalization cluster, 
and introduction of CUSDEC Tracking 
System and Vehicle Verification Portal. The 
Excise Department has undertaken a series 
of coordinated initiatives, in collaboration 
with 
the 
Commission 
to 
Investigate 
Allegations 
of 
Bribery 
or 
Corruption 
(CIABOC) to prevent, detect, and respond 
to corruption risks within the institution. 
Key measures, included the appointment 
of an integrity officer, the implementation 
of awareness and prevention programmes, 
the establishment of an internal affairs unit, 
a risk management unit, and a financial 
investigation unit.
The Simplified VAT (SVAT) system has been 
repealed effective from October 01, 2025 
shifting to a standard VAT refund process 
for eligible exporters and their suppliers to 
improve VAT compliance. Meanwhile, Key 
Performance Indicators (KPIs) have been 
introduced to track and monitor the IRD 
performance. 
In the same vein, the VAT compliance 
improvement 
programme 
continued 
in 2025. As a result, the number of VAT 
registrations has increased by 44.5 percent 
to 31,134 by end September 2025, from 
21,542 by end December 2024. The VAT 
compliance improvement plan together 
with the medium term IRD modernization 
strategy 
and 
implementation 
plan 
have been introduced to improve the 
compliance. Meanwhile, the High Worth 
Individuals (HWI) Unit is expected to 
conduct tax audits and increase the 
coverage of HWI.

BEFPR 2026 · file page 39 printed page 25

Budget, Economic and Fiscal Position Report - 2026	
25   
During the first eight months of 2025, 
total government expenditure moderately 
increased by 6.8 percent to Rs. 3,712.5 
billion, from Rs. 3,476.9 billion in the same 
period of 2024. Recurrent expenditure 
increased by 11.2 percent to Rs. 3,381.3 
billion in the first eight months of 2025, 
from Rs. 3,041.6 billion in the same period 
of 2024. This was mainly due to the 
increased spending on interest payments 
by 8.2 percent to Rs. 1,687.6 billion, salaries 
and wages by 15.3 percent to Rs. 760.7 
billion driven by the basic salary revision 
implemented in the public sector with 
effect from April 1, 2025, subsidies and 
transfers by 15.8 percent to Rs. 722.4 
billion and subsidies to households by 
16.5 percent to Rs. 647.2 billion and goods 
and services by 6.1 percent to Rs. 210.6 
billion. Interest payments on domestic 
borrowing in the first eight months of 2025, 
which constituted 86.9 percent of total 
TABLE 2.2 : Estimated and Actual Revenue and Expenditure - 2025
Rs. Bn.
Item
Annual 
Estimate
Jan.-Aug.
Achievement 
(%)
Provisional
Total Revenue
4,960.0
3,294.8
66.4
   Tax Revenue
4,590.0
3,068.5
66.9
      Inland Revenue Department
         Tax on Income and Profit
1,167.0
702.4
60.2
         VAT - Domestic (Net)
825.0
567.5
68.8
         SSCL (Domestic)
190.0
145.8
76.7
         Other
13.2
10.7
80.8
      Sub Total
2,195.2
1,426.3
65.0
      Customs Department
         VAT - Imports (Net)
790.0
516.8
65.4
         SSCL (Import)
74.0
45.0
60.9
         Ports & Airports Development Levy (PAL)
185.0
115.9
62.6
         Cess Levy
100.0
56.5
56.5
         Special Commodity Levy
126.0
103.6
82.3
         Import Duty
240.0
151.0
62.9
      Excise Special Provisions
         Cigarettes
130.0
61.9
47.6
         Petroleum
230.0
120.8
52.5
         Motor Vehicles & Other
239.0
278.6
116.6
         Other
1.0
6.1
592.5
      Sub Total
2,115.0
1,456.3
68.9
      Excise Department
         Liquor/Tobacco
242.0
146.6
60.6
      Sub Total
242.0
146.6
60.6
      Other
         Telecommunication Levy
18.0
10.6
58.6
         Licence Tax & Other
19.7
28.8
145.7
      Sub Total
37.7
39.3
104.2
   Non Tax Revenue
370.0
226.2
61.1
Total Expenditure
7,190.0
3,712.5
51.6
   Current Expenditure
5,886.0
3,381.3
57.4
         Salaries and Wages
1,230.0
760.7
61.8
         Interest Payments
2,950.0
1,687.6
57.2
         Pension Payments
442.0
282.9
64.0
         Transfers to Public Corporations & Institutions
172.0
75.2
43.7
         Other
1,092.0
575.0
52.7
   Capital Expenditure and Net Lending
1,304.0
331.2
25.4
Sources: Department of Treasury Operations and Department of Fiscal Policy

BEFPR 2026 · file page 40 printed page 26

26                                                                      Budget, Economic and Fiscal Position Report - 2026
interest expenditure, increased slightly 
by 0.5 percent to Rs. 1,687.6 billion, while 
interest payments on foreign borrowing 
in the first eight months of 2024 increased 
significantly by 121.1 percent to Rs. 221.1 
billion. The significant increase in interest 
payments on foreign borrowings was 
mainly driven by the resumption of actual 
interest payments on loans from the China 
Development Bank, the Government of 
Japan, the Export-Import Bank of India, and 
International Sovereign Bonds following 
the debt restructuring.  Expenditure on 
salaries and wages of public servants 
increased by 15.3 percent to Rs. 760.7 
billion in the first eight months of 2025.
Expenditure 
on 
public 
investments 
declined by 25.5 percent to Rs. 338.8 
billion in the first eight months of 2025, 
from Rs. 454.7 billion in the same period 
of 2024, reflecting slower execution of the 
capital expenditure due to the conduct 
of budgetary operations on a Vote on 
Account during the first four months 
of 2025. The achievement of public 
investment against the annual estimate 
remained 
substantially 
low 
at 
25.8 
percent.  To address this situation, several 
measures such the establishment of Public 
Investment Committee, the preparation of 
a rolling medium-term Public Investment 
Programme, 
strengthened 
project 
monitoring and evaluation and enhanced 
transparency and reporting have been 
introduced within the provisions of the 
Public Financial Management Act.  
The overall budget deficit narrowed 
significantly by 54.9 percent to Rs. 411.0 
billion in the first eight months of 2025, 
from Rs. 911.0 billion in the same period of 
2024. This improvement was largely driven 
by strong revenue performance, with total 
revenue increasing by 28.8 percent to 
Rs. 3,294.7 billion, supported by strong tax 
collections across income tax, goods and 
services, and external trade. Meanwhile, 
continued efforts have been made to 
rationalize recurrent expenditure amidst 
the increase in recurrent expenditure due 
to salary increase in 2025, while capital 
expenditure and net lending remained 
subdued at Rs. 331.2 billion.
2.2 Government Revenue
Total 
Government 
Revenue 
excluding 
grants significantly increased by 28.8 
percent to Rs. 3,294.7 billion in the first 
eight months of 2025 compared to 
Rs. 2,557.8 billion in the same period of 
2024, with the realization of 66.4 percent 
of the 2025 revenue estimate. This surge in 
revenue was mainly due to the increase in 
tax revenue by 30.7 percent to Rs. 3,068.5 
billion in the first eight months of 2025 
from Rs. 2,348.5 billion recorded in the 
same period of 2024. The collection of tax 
revenue contributed to 93.1 percent of the 
total revenue and was an achievement of 
66.9 percent of the estimate for 2025.
The increase in tax revenue was led by the 
increase in revenue from:
1.	
Income taxes by 12.4 percent or 
Rs. 77.7 billion as a result of the tax 
policy changes implemented with 
effect from April 1, 2025 on the Personal 
Income Tax (PIT) and Corporate 
Income Tax (CIT), Advanced Personal 
Income Tax (APIT) and Withholding 
Tax (WHT), the impact of increased 
wages in both the public and informal 
private sectors, positive impact of the 
increased economic activities and 
positive impact of tax administration 
measures;
2.	
VAT by 28.7 percent or Rs. 241.8 billion 
driven by increase of VAT on imports 
by 38.3 percent to Rs.  516.8 billion 
due to relaxation of import of all types 
of motor vehicles with effect from 
February 2025 and the increase of VAT 
on domestic activities by 21.1 percent 
to Rs. 567.5 billion resulted from 
expansion of domestic activities, the 
full impact of the increase of the VAT 
rate to 18 percent from 15 percent and 
the reduction in the VAT registration 
threshold from Rs. 80 million per 
annum to Rs. 60 million per annum and 
administrative measures reflecting an 
increase of VAT registrations by 49.9 
percent to  29,960 files excluding 
financial services in the first  eight 
months of 2025, compared to the 
19,987 files in the same period of 2024

BEFPR 2026 · file page 41 printed page 27

Budget, Economic and Fiscal Position Report - 2026	
27   
3.	
Excise duty on Motor vehicles by 640.5 
percent or Rs. 234.0 billion driven by 
the increase in importation of motor 
vehicles with the release of import 
restrictions for all types of motor 
vehicles with effect from February 2025 
together with increased Excise duty 
rates on motor vehicles by 5.9 percent 
with the application of inflation adjusted 
indexation with effect from January 11, 
2025.
4.	
Excise duty on liquor by 9.1 percent 
or Rs. 12.1 billion, mainly driven by the 
increase of Excise duty rates by 5.9 
percent with the application of inflation 
adjusted indexation with effect from 
January 11, 2025
5.	
Special Commodity Levy (SCL) by 
54.2 percent or Rs. 36.4 billion due to 
the upward revision of duty rates  of 
potatoes and B’onions and the increase 
in the volume of imports in the major 
commodities liable for SCL;
6.	
Social Security Contribution Levy (SSCL) 
by 18.8 percent or Rs. 30.2 billion driven 
by the increase in economic activities 
and 
improved 
tax 
administration 
measures reflecting the increase of 
SSCL file registrations by 34.4 to 14,898 
files in the first eight months of 2025 
compared to 11,083 files in the same 
period of 2024;
7.	
Customs Import Duty (CID) by 117.5 
percent or Rs. 81.6 billion mainly due 
to the application of 20.0 percent of 
CID on motor vehicles together with an 
increase in the import of goods in the 
respective period; and
8.	
CESS by 8.8 percent or Rs. 4.6 billion 
driven by the increase in imports liable 
for CESS. 
The increase in non–tax revenue by 8.1 
percent or Rs. 17.0 billion in the first eight 
months of 2025 also had a positive impact 
on the revenue. This was mainly due to the 
increase in revenue from interest income, 
rent income, fines, fees and charges and 
social security contribution.
Source : Department of Fiscal Policy
Income Tax
21%
VAT
33%
Excise
18%
PAL
4%
SSCL
6%
Import Duty
5%
SCL
3%
CESS
2%
Telecommuni
cation Levy
0%
Other
1%
Non Tax
7%
TL
0.3%
FIGURE 2.1 : Composition of Total Revenue (%) - (January to August 2025)
Key : 	 VAT	
-	 Vaue added Tax
	
PAL	
-	 Ports and Airports Development Levy
	
SSCL	
-	 Social Secuity Contribution Levy
	
SCL	
-	 Special Commodity Levy
	
TL	
-	 Telecommunication Levy

BEFPR 2026 · file page 42 printed page 28

28                                                                      Budget, Economic and Fiscal Position Report - 2026
Source : Department of Fiscal Policy
TABLE 2.3 : Summary of Performance of Government Revenue
       
Item
Jan. - Aug.
Change 
(%)
2024
2025 (a)
Tax Revenue
2,348,529
3,068,495
30.7
    Income Tax
624,670
702,351
12.4
    Domestic Consumption Based Tax
801,586
929,865
16.0
        VAT
468,759
567,470
21.1
        Excise Tax
209,910
216,614
3.2
        SSCL
      122,917 
145,781
18.6
    Import Based Tax
889,813
1,380,169
55.1
        Import Duty
69,419
150,988
117.5
        VAT
373,728
516,778
38.3
        SSCL
       37,737 
45,032
19.3
        Ports & Airports Development Levy (PAL)
113,926
115,886
1.7
        Special Commodity Levy (SCL)
67,222
103,641
54.2
        Excise Tax
175,830
391,313
122.6
        Cess
51,951
56,529
8.8
    Licence Taxes and Other
32,460
56,110
72.9
Non-Tax Revenue
209,263
226,244
8.1
Total Revenue
2,557,792
3,294,740
          28.8 
Source: Department of Fiscal Policy
(a) Provisional
Income tax
Revenue from income taxes increased by 
12.4 percent to Rs. 702.4 billion in the first 
eight months of 2025, compared to Rs. 624.7 
billion recorded in the same period of 2024. 
This reflects a realization of 60.2 percent of 
the annual estimate, supported by enhanced 
compliance measures and the removal of 
certain exemptions.
Revenue from Advance Personal Income Tax 
(APIT) showed a growth of 7.4 percent to 
Rs. 143.9 billion in the first eight months of 
2025 compared to Rs. 134.0 billion in the 
same period of 2024. The revenue collection 
from APIT in the first eight months of 2025 
was equivalent to 92.3 percent of the annual 
estimate. 
Rs. Mn.
FIGURE 2.2 : Tax Revenue by Source (%) - (January to August 2025)
Income Tax
23%
Domestic 
Cosumption 
Based Taxes
30%
Import Based 
Taxes
45%
License Taxes 
and Other
2%

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Budget, Economic and Fiscal Position Report - 2026	
29   
Personal income tax revenue incresed by 
36.2 percent in the first eight months of 
2025 compared to the same period of 2024, 
largely supported by increase in wage 
levels, including substantial salary revisions 
in the public sector implemented from 
January 2025, and the upward adjustment 
of minimum wages in the private sector 
from April 2025.  The corporate tax revenue 
increased by 15.1 percent to Rs. 397.3 billion 
in the first eight months of 2025, from 
Rs. 345.3 billion in the same period of 2024. 
The upward adjustment of the CIT rate from 
40 percent to 45 percent for the liquor, 
tobacco, betting, and gaming industries 
effective from April 01, 2025 together with 
the imposition of a 15 percent tax on the 
export of services, is expected to further 
strengthen collections in the forthcoming 
periods by broadening the tax base and 
capturing a sector with growing foreign 
exchange earnings.
The revenue from WHT/AIT increased by 3.9 
percent to Rs. 117.9 billion in the first eight 
months of 2025 from Rs. 113.4 billion in the 
same period of 2024. This is an achievement 
of 51.3 percent of the annual estimate of 
Rs. 230.0 billion. The increase primarily 
reflects the raising of he WHT/AIT rate from 
5.0 percent to 10 percent, effective from 
April 2025.
TABLE 2.4 : Performance of  Income Tax
Tax Base
Jan. - Aug.
Growth 
(%)
2024
2025 (a)
Corporate and Non Corporate
377,003
440,494
16.8
PAYE
133,974
143,949
7.4
Tax on Interest Income
113,446
117,890
3.9
Economic Service Charge
248
19
-92.3
Total
624,670
702,351
12.4
Source: Department of Fiscal Policy
(a) Provisional
Value Added Tax (VAT) 
Revenue from VAT increased significantly 
by 28.7 percent to Rs. 1,084.2 billion in the 
first eight months of 2025 compared to Rs. 
842.5 billion in the same period of 2024. VAT 
revenue from both domestic and import 
activities increased in the first eight months 
of 2025. VAT on domestic activities increased 
by 21.1 percent to Rs. 567.5 billion in the first 
eight months of 2025 from Rs. 468.8 billion in 
the same period of 2024 due to expansion of 
domestic economic activities. VAT revenue 
from imports increased significantly by 
38.3 percent to Rs. 516.8 billion in the first 
eight months of 2025, from Rs. 373.7 billion 
in the same period of 2024. This was mainly 
attributable to the increase in VAT revenue 
from imported vehicles with the removal 
of import restrictions on all categories of 
vehicles with effect from February 01, 2025. 
Accordingly, the VAT revenue contributed 
32.9 
percent 
of 
the 
overall 
revenue 
performance of the first eight months of 
2025. The realization of revenue from VAT 
was 67.1 percent in the first eight months of 
2025 from the annual estimate of Rs. 1,615.0 
billion.  
Excise Duty (Special Provisions)
Revenue 
generated 
from 
Excise 
Duty 
increased by 57.6 percent to Rs. 607.9 billion 
in the first eight months of 2025, compared 
to Rs. 841.0 billion in the same period of 2024. 
This growth was mainly driven by higher 
revenue from motor vehicles, liquor, and 
other excisable articles, despite a decline 
in revenue from petroleum and cigarettes. 
Revenue from Excise Duty accounted for 19.8 
percent of total tax revenue and 18.5 percent 
of total revenue collection during the first 
eight months of 2025, while achieving 72.3 
percent of the annual estimate.
Rs. Mn.

BEFPR 2026 · file page 44 printed page 30

30                                                                      Budget, Economic and Fiscal Position Report - 2026
Revenue from Excise Duty on motor 
vehicles increased sharply by 640.5 percent 
to Rs. 270.5 billion in the first eight months 
of 2025, compared to Rs. 36.5 billion in the 
same period of 2024, mainly due to the 
lifting of temporary restrictions on motor 
vehicle imports with effect from February 
1, 2025. 
Revenue 
from 
petroleum 
products 
declined significantly by 13.3 percent to 
Rs. 120.8 billion during the first eight 
months of 2025, compared to Rs. 139.3 
billion in the same period of 2024. This 
decline was mainly driven by reductions 
in global fuel prices, lower diesel imports 
volumes, and the modest appreciation of 
the rupee.
Revenue from excise duty on liquor 
increased by 9.1 percent to Rs. 145.7 billion 
in the first eight months of 2025, compared 
to Rs. 133.6 billion in the same period of 
2024, contributing 24.0 percent to the 
total Excise duty revenue. Excise duties on 
liquor increased by 5.9 percent with effect 
from January 01, 2025 as per the policy of 
inflation indexation of Excise taxes. The 
realization of revenue from tax on liquor 
in the first eight months of 2025 was 60.7 
percent of the annual estimate for 2025. The 
overall production of alcohol increased by 
11.5 percent to 23.9 million absolute litres 
in the first eight months of 2025 compared 
to 21.4 million absolute litres in the same 
period of 2024. Hard liquor production 
increased by 15.9 percent to 14.1 million 
absolute 
litres 
and 
beer 
production 
increased marginally by 4.1 percent to 9.6 
million absolute litres during the first eight 
months of 2025 compared to the same 
period of 2024.
Meanwhile, revenue from Excise Duty 
on 
other 
excisable 
items, 
including 
sweetened beverages, refrigerators, palm 
oil, and fatty acids, increased sharply 
by 72.9 percent to Rs. 8.1 billion in the 
first eight months of 2025, compared to 
Rs. 4.7 billion in the same period of 2024. 
This growth was mainly attributable to 
the upward revision of Excise Duty rates 
by 5.9 percent, effective from January 11, 
2025, under the annual inflation-adjusted 
indexation mechanism, as well as higher 
imports driven by elevated demand and 
strengthened economic activity during 
the first eight months of 2025. However, 
revenue from cigarettes declined by 12.3 
percent to Rs. 62.8 billion during the first 
eight months of 2025, compared to Rs 71.6 
billion in the same period of 2024. 
TABLE 2.5 : Performance of  VAT 
                                           Rs. Mn.
Tax Base
Jan. - Aug.
Growth 
(% )
2024
2025 (a)
Domestic
      468,759 
      567,470 
21.1
Imports
373,728
516,778
38.3
Net Revenue
     842,488 
1,084,248
28.7
Source : Department of Fiscal Policy
(a) Provisional
TABLE 2.6 : Performance of Excise Duty 
                         
Tax Base
Jan. - Aug.
Growth 
(% )
2024
2025 (a)
Liquor
133,584 
145,698 
9.1
Cigarettes and Tobacco
71,637 
62,810 
-12.3
Motor Vehicles
36,532 
270,526 
640.5
Petroleum 
139,298 
120,787 
-13.3
Other
4,689 
8,105 
72.9
Total
385,740 
607,927 
57.6
Source : Department of Fiscal Policy
(a) Provisional
Rs. Mn.
Source : Department of Fiscal Policy
Figure 2.3 : Performance of Excise Duty 
(January - August 2025)
134 
72 
37 
139 
5 
146 
63 
271 
121 
8 
 -
 40
 80
 120
 160
 200
 240
 280
Liquor
Cigarettes
& Tobacco
Motor
Vehicles
Petroleum
Other
Rs. Billion
2024
2025

BEFPR 2026 · file page 45 printed page 31

Budget, Economic and Fiscal Position Report - 2026	
31   
Social Security Contribution Levy (SSCL)  
Revenue from SSCL increased by 18.8 
percent to Rs. 190.8 billion in the first eight 
months of 2025, from Rs.160.7 billion in 
the same period of 2024. This was driven 
by expansion of the domestic and external 
activities together with improved tax 
administration measures reflecting growth 
in the number of SSCL file registrations 
by 34.5 percent to 14,898 as of August 31, 
2025. The realization of revenue from SSCL 
was 72.3 percent in the first eight months 
of 2025.
Customs Import Duty (CID) 
Revenue collected from CID significantly 
increased by 117.5 percent to Rs. 151.0 billion 
in the first eight months of 2025 compared 
to Rs. 69.4 billion in the same period of 
2024. The increase is mainly attributable to 
the removal of import restrictions on the 
majority of imported items and impose of 
20 percent CID on motor vehicles. 
Special Commodity Levy (SCL) 
Revenue collection from SCL increased 
notably by 54.2 percent to Rs. 103.6 billion 
in the first eight months of 2025 compared 
to Rs. 67.2 billion recorded in the same 
period of 2024. This was mainly due to the 
increase in the volume of imports of the 
major commodity items. 
Commodity 
Export 
Subsidy 
Scheme 
(CESS) 
Revenue collected from CESS increased 
by 8.8 percent to Rs. 56.5 billion in the 
first eight months of 2025, compared to 
Rs. 52.0 billion in the same period of 2024. 
The increase is mainly attributable to the 
increase of import volume of the goods 
subject to CESS with the removal of import 
restrictions on most imported items. 
Ports and Airports Development Levy 
(PAL) 
The total revenue collected from PAL 
increased marginally by 1.7 percent to 
Rs. 115.9 billion in the first eight months 
of 2025, compared to Rs. 113.9 billion 
recorded in the same period of 2024. 
This was mainly due to the increase in 
the volume of imports with the release of 
import restrictions.  
Telecommunication Levy (TL) 
Revenue generated from TL marginally 
decreased by 5.9 percent to Rs. 10.6 
billion in the first eight months of 2025, 
from Rs. 11.2 billion in the same period of 
2024 due to value of supply of non-internet 
telecommunication services is reducing 
whereas value of services of internet 
services which is telecommunication levy 
does not apply, is increasing.
Luxury Motor Vehicle Tax and Other Tax 
Revenue generated from Luxury Motor 
Vehicle Tax and other tax significantly 
increased by 113.3 percent to Rs. 45.1 billion 
in the first eight months of 2025, from Rs. 21.1 
billion in the same period of 2024. Revenue 
from luxury motor vehicle tax increased 
by 1,115.7 percent to Rs. 22.3 billion in the 
first eight months of 2025 compared to 
Rs. 1.8 billion in 2024 and motor vehicle 
entitlement levy by 3,705.5 percent to 
Rs. 5.7 billion in the first eight months of 
2025, compared to Rs.0.15 billion recorded 
in the same period of 2024. This was 
mainly due to the relaxation of restriction 
on  motor vehicle from February 2025. 
Meanwhile, revenue from betting and 
gaming decreased by 47.1 percent to 
Rs. 6.0 billion in the first eight months of 
2025, compared to Rs. 11.4 billion recorded 
in the same period of 2024. Revenue 
from share transaction levy significantly 
increased by 212.5 percent to Rs. 4.5 billion 
in the first eight months of 2025, compared 
to Rs. 1.5 billion recorded in the same period 
of 2024. This was mainly due to increase of 
value and volume of share transactions as a 
result of economic recovery.

BEFPR 2026 · file page 46 printed page 32

32                                                                      Budget, Economic and Fiscal Position Report - 2026
TABLE 2.7 : Motor Vehicle Imports  
Item
Imports Jan. - Aug.
2024
2025
Change
%
Motor Cars
925
36,691
35,766
3,866.6 
Passenger Vans & Buses
18
1,069
1,051
5,838.9 
Three Wheelers
62
9,454
9,392
15,148.4 
Motor Cycles
11,411
97,952
86,541
758.4 
Goods Transport Vehicles (a)
274
4,834
4,560
1,664.2 
Land Vehicles (b)
3,224
4,302
1,078
33.4 
Other  (c)
  19,840 
22,912 
3,072
15.5 
Total
  35,754 
  177,214 
141,460
396
Sources: Sri Lanka Customs
(a) Lorries, other Goods Transport Vehicle and Special Purpose Vehicle
(b) Tractor, Hand Tractor, Bowser and Other Land Vehicles
(c) Single cab, Dual Purpose vehicle, Quardycycles ,Motor Homes
TABLE 2.8 : Coverage of Product and Value of Imports/Exports Under Free Trade Agreements                                
Free Trade Agreement
Jan. - Aug. 2025
No. of Products 
Subject to Tariff 
Concessions 
(HS 8 Digit)
Import value 
(CIF/Rs. Mn)
Export Value 
(FOB/Rs. Mn)
Asia - Pacific Trade Agreement (APTA)
808                    5,771 
44,920
India - Sri Lanka Free Trade Agreement (ISFTA)
5,329 
84,707 
124,672
Pakistan - Sri Lanka Free Trade Agreement (PSFTA)
6,200                    3,557 
9,310
South Asia Free Trade Agreement (SAFTA)
5,932                    3,661 
20,410
Singapore Sri Lanka  Free Trade Agreement (SSFTA)
4,334 
1,008 
19
Total
22,603                 98,704 
            199,331 
Sources: Sri Lanka Customs, Department of Trade and Investment Policy
TABLE 2.9 :  CESS Revenue from International Trade
Rs. Mn.
Item
Jan. - Aug.
2024
2025 (a)
CESS on Exports
                  1,416                     954 
Tea-under Tea (Tax and Control of Export) Act, Sri Lanka Tea Board Law
                    331                     241 
Rubber-under Rubber Replanting Subsidy Act
                      10                         1 
Coconut-under Coconut Development Act
                    138                      127 
EDB CESS- under Sri Lanka Export Development Act
                    937 
587 
CESS on Imports- under Sri Lanka Export Development Act
               50,534                 55,575 
Total
                51,951 
56,529 
Source: Department of Fiscal Policy
(a) Provisional

BEFPR 2026 · file page 47 printed page 33

Budget, Economic and Fiscal Position Report - 2026	
33   
Non-Tax Revenue 
Non-tax revenue moderately increased 
by 8.1 percent to Rs. 226.2 billion in the 
first eight months of 2025, compared 
to Rs. 209.3 billion in the same period of 
2024. Revenue from non-tax contributed 
6.9 percent to the total revenue. This 
was mainly due to an increase in revenue 
generated from fines, fees and charges, 
interest 
income 
and 
social 
security 
contributions. Accordingly, revenue from 
interest increased by 25.8 percent to Rs. 
43.4 billion in the first eight months of 
2025, compared to Rs. 34.5 billion in the 
same period of 2024. Revenue from fines, 
fees, and charges increased by 9.5 percent 
to Rs. 112.6 billion in the first eight months 
of 2025, compared to Rs. 102.8 billion in 
the same period of 2024, mainly due to the 
upward revision of fees and charges of the 
Department of Motor Traffic, Department 
of Immigration and Emigration and the 
Department of Registration of Persons. 
Revenue from Social Security Contributions 
also increased by 32.2 percent to Rs. 
36.6 billion in the first eight months of 
2025, compared to Rs. 27.7 billion in the 
same period of 2024 due to increase of 
contribution rate up to 8 percent for all 
Government Employees. Revenue from 
rent also increased by 15.0 percent to Rs. 
3.9 billion in the first eight months of 2025, 
from Rs. 3.3 billion in the same period of 
2024. Meanwhile, non-tax revenue from 
profits and dividends from State Owned 
Enterprises (SOEs) decreased by 45.3 
percent to Rs. 14.6 billion in the first eight 
months of 2025, from Rs. 26.8 billion in 
the same period of 2024. The realization 
of non-tax revenue was 61.1 percent in the 
first eight months of 2025, as against the 
annual estimate of Rs. 370 billion.
Item
Rs. Bn.
Major Reasons for Variance
2024  
Jan - Aug 
2025 
(Annual 
Estimate)
2025 
Jan-Aug(a) 
Income Taxes
624.7      1,167.0 
702.4 Revenue collection from Income Taxes increased 
by 12.4 percent to Rs 702.4 billion in the first eight 
months of 2025 compared to the same period of 
2024. The realization of income tax revenue was 
60.2 percent in the first eight months of 2025 
against the annual estimate for the year. This 
performance was mainly attributable to:  
- 	 Increased wages of the public and private 
sector;
- 	 Expanded economic activities;
- 	 Increased WHT rate on interest to 10 percent 
from 5 percent with effect from 01.04.2025; 
and
- 	
Increased number of tax file registrations by 
16.3 percent to 1,270,851 as at end August of 
2025 from 1,093,134 files registered in end 2024 
with the improved tax administration measures. 
TABLE 2.10 : Variance Analysis of Government Revenue

BEFPR 2026 · file page 48 printed page 34

34                                                                      Budget, Economic and Fiscal Position Report - 2026
Item
Rs. Bn.
Major Reasons for Variance
2024  
Jan - Aug 
2025 
(Annual 
Estimate)
2025 
Jan-Aug(a) 
Value Added Tax 
(VAT)
842.5        1,615.0 
1,084.2 Revenue from VAT increased significantly by 28.7 
percent to Rs. 1,084.2 billion in the first eight 
months of 2025 from Rs. 842.5 billion in the same 
period of 2024, a realization of 67.1 percent of 
the annual estimate. The significant increase in 
revenue from VAT was mainly driven by:
-	 Lifted import restrictions on motor vehicles;
-	 Increased total imports by 10.5 percent;
- 	 Expanded domestic economic activities; and
- 	 Increased number of tax file registrations by 
40.6 percent to 30,298 as at end August of 
2025 from 21,542 files at end 2024 due to the 
improved VAT compliance.
Excise Duty
385.7        841.0 
607.9 Revenue from Excise Duty showed a significant 
increase of 57.6 percent to Rs. 607.9 billion 
in the first eight months of 2025, compared 
to the same period of 2024, achieving 72.5 
percent of the annual budget estimate. This 
outperformance 
was 
primarily 
driven 
by: 
-	 Increased revenue from Excise Duty on 
motor vehicles, following relaxation of import 
restrictions on all type of motor vehicle 
imports with effect from February 2025;
- 	 Increased Excise Duty rate on excisable articles 
including motor vehicles, cigarettes, sugar 
based beverages etc. under Excise (Special 
Provisions) Act, No. 13 of 1989 by 5.9 percent 
based on an annual inflation indexation;
-	 Increased Excise Duty rate on liquor by 
5.9 percent based on an annual inflation 
indexation; and
- 	 Increased revenue  from other excisable 
articles such as sugar based beverages, 
refrigerates, 
palm 
oil 
and 
fatty 
acids 
by 
 
72.9 
percent 
to 
Rs. 
8.1 
billion. 
However, a decline in revenue from petroleum 
products by 13.3 percent and cigarettes by 
12.3 percent negatively contributed to the 
overall performance of excise duty revenue. 
Import Duties
69.4
240.0 
151.0 The realization of CID was 62.9 percent as against 
the annual budget estimate for 2025 mainly due 
to:
-	 Imposed Customs Import Duty of 20 percent 
on importation of motor vehicles with effect 
from 28.01.2025; 
-	 Imposed a surcharge of 50 percent on Import 
Duties for the importation of Motor Vehicles 
with effect from 01.02.2025; and
-	 Increased imports by 10.5 percent in the first 
eight months of 2025.
TABLE 2.10 : Variance Analysis of Government Revenue  (Contd..)

BEFPR 2026 · file page 49 printed page 35

Budget, Economic and Fiscal Position Report - 2026	
35   
Item
Rs. Bn.
Major Reasons for Variance
2024  
Jan - Aug 
2025 
(Annual 
Estimate)
2025 
Jan-Aug(a) 
Port and Airport 
Development Levy 
(PAL)
113.9 
185.0 
115.9 The revenue collection from PAL marginally 
increased by 1.7 percent to Rs. 115.9 billion in the 
first eight months of 2025, realizing 62.6 percent 
of the annual budget estimate. This performance 
was mainly driven by;  
-  Increased imports by 10.5 percent in the first 
eight months of 2025.
Special 
Commodity Levy 
(SCL)
67.2 
126.0 
103.6 The revenue from SCL significantly increased by 
54.2 percent to Rs. 103.6 billion with realization of 
82.3 percent from annual estimate in the first eight 
months of 2025. This was mainly due to:  
- 	 The upward revision of duty rates on potatoes, 
rice, salt and B’onions; and 
- 	 The increased value of imports of major 
commodity items by 16.9 percent including 
dairy products, Cereals and milling industry 
products, oils and fats etc.
Social Security 
Contribution Levy 
(SSCL)
160.7         264.0 
190.8 The realization of SSCL in the first eight months 
of 2025 was 72.3 percent as against the annual 
estimate. This was achieved mainly due to: 
- 	 Increased imports by 10.5 percent in the first 
eight months of 2025; and
- 	 Expanded domestic economic activities. 
Other Taxes
84.4         152.0 
112.6 The revenue from Other Taxes increased by 33.4 
percent to Rs. 112.6 billion in the first eight months 
of 2025 from Rs. 84.4 billion recorded in the same 
period of 2024.  The realization of other taxes 
revenue was  74.1 percent of the annual estimate 
for 2025. This was primarily driven by: 
- 	 CESS Levy increased by 8.8 percent owing to 
the increase in imports; and
- 	 Increased revenue from Luxury Tax on motor 
vehicles to Rs. 22.3 billion in the first eight 
months of 2025 compared to Rs. 1.8 billion in 
the same period of 2024 with the relaxation of 
restrictions on motor vehicle imports.
However, revenue from Telecommunication Levy 
dropped by 5.9 percent reflecting lower usage of 
fixed line telecommunication services. 
Non-Tax Revenue
209.3        370.0 
226.2 The revenue collected from Non-Taxes in-
creased by 8.1 percent to Rs 226.2 billion in 
the first eight months of 2025, mainly due to 
the increased  revenue from interest income, 
rent, fines, fees, and charges and receipts 
from the Social Security Contribution. It was 
a realization of 61.1 percent of the estimate. 
However, the receipts from Profits and Dividends 
declined in the first eight months of 2025.
Total
2,557.8 
  4,960.0 
3,294.7  
Compiled by the Department of Fiscal Policy
(a) Provisional
TABLE 2.10 : Variance Analysis of Government Revenue  (Contd..)

BEFPR 2026 · file page 50 printed page 36

36                                                                      Budget, Economic and Fiscal Position Report - 2026
Effective Date
Measures
Income Tax- Amendments to the Inland Revenue Act, No. 24 of 2017
01.04.2025
Inland Revenue (Amendment) Act, No. 2 of 2025
1)	
Personal Income Tax (PIT) Rate Structure
To increase personal income tax relief of an individual to Rs. 1,800,000/- per annum 
and to revise the tax rates applicable on the taxable income of an individual as 
follows,
2)	 Revision of CIT Rates
(i)	
To increase the income tax rate applicable on the gains and profits from the 
manufacture and sale or import and sale of any liquor or tobacco product other 
than the export of such product and the gains and profits from conducting 
betting and gaming from 40 percent to 45 percent.
(ii)	 To impose income tax on the gains and profit earned or derived from any 
service rendered in or outside Sri Lanka to any person to be utilized outside Sri 
Lanka, where the payment for such services is received in foreign currency and 
remitted through a bank to Sri Lanka at the rate of 15 percent.
(iii)	 To impose income tax on the gains and profit earned or derived from any 
foreign source where such gain and profit are earned or derived in foreign 
currency and remitted through a bank to Sri Lanka at the rate of 15 percent.
3)	
Advance Income Tax rate (WHT rate)
To increase Advance Income Tax rate (WHT rate) applicable on interest or discount 
paid from 5 percent to 10 percent.
Stamp Duty-  Stamp Duty ( Special Provisions) Act, No. 12 of 2006
01.04.2025
Gazette Notification No. 2429/39 of 27.03.2025
-	
To increase the Stamp Duty applicable on any instrument relating to the lease or 
hire of any property from Rs. 10/- to Rs. 20/- for every Rs. 1,000/- or part thereof 
of the aggregate lease or hire including any premium, payable for the whole term 
comprised in the lease or hire Agreement (other than a hire purchase agreement).
Gambling Regulatory Authority - Gambling Regulatory Authority Act No. 17 of 2025
03.09.2025
To establish a Gambling Regulatory Authority with the purview, 
a.	
To regulate and control gambling activities;
b.	
To ensure the collection of revenue in relation to gambling;
c.	
To ensure transparency and good governance in the conduct of gambling;
d.	
To promote public confidence in the integrity of the gambling industry;
e.	
To ensure that gambling is conducted in a fair and transparent manner
BOX 2.1 : Major Fiscal Measures (January – September, 2025) (Contd..)
Annual Taxable Income (Rs.) (Rs. Mn.)
Marginal Tax Rate (%)
Previous Tax Slabs
Current Tax Slabs
0
Up to 1.2 
Up to 1.8 
6
1.2  –  1.7 
1.8  -  2.8 
12
1.7  –  2.2 
-
18
2.2 –  2.7 
2.8  -  3.3 
24
2.7  -  3.2 
3.3  -  3.8 
30
3.2 –  3.7 
3.8  -  4.3 
36
Over 3.7 
Over 4.3

BEFPR 2026 · file page 51 printed page 37

Budget, Economic and Fiscal Position Report - 2026	
37   
Effective Date
Measures
Value Added Tax (VAT)- Value Added Tax Act, No. 14 of 2002
01.01.2024
11.04.2025
11.04.2025
11.04.2025
w.e.f. 01.10.2025
w.e.f. 01.10.2025
Value Added Tax (Amendment) Act, No. 4 of 2025
1)	
To avoid the unintended effects of the removal of exemptions from the Value 
Added Tax Act, No. 14 of 2002, to maintain clarity and to ensure smooth 
implementation of the VAT reforms introduced by the Value Added Tax 
(Amendment) Act, No. 32 of 2023.
2)	
To issue the permanent VAT Registration Certificate when the import/export 
is done for commercial purposes, disregarding the facts that the goods are 
exempted from VAT or the importer/exporter is below the VAT registration 
threshold.
3)	
To issue instructions by the Commissioner General of Inland Revenue to file VAT 
Returns in respect of the VAT exempt supplies/purchases as well.   
4)	
To exempt the supply of locally produced liquid milk and yoghurt from VAT.
5)	
To impose VAT on the supply of services by the Non-residents through an 
electronic platform with effect from October 01, 2025.
6)	
To repeal the Simplified VAT (SVAT) system, with effect from October 01, 2025 
and to introduce a risk-based refund mechanism to expedite the refund process.
Excise (Special Provisions) Duty -  Excise (Special Provisions) Act, No. 13 of 1989
11.01.2025
Gazette Notification No. 2418/43 of 10.01.2025
-	
To increase Excise Duty for all excisable articles with unit rates by 5.9 percent based 
on an annual inflation adjustment indexation.
01.02.2025
Gazette Notification No. 2421/42 of 31.01.2025
-	
To increase the Excise Duty on Electric Vehicles by 100 percent.
29.04.2025
Gazette Notification No. 2434/04 of 28.04.2025
-	
To impose Excise Duty for the newly created National Sub Divisions for electric 
motor vehicles with engine used (petrol, diesel or semi-diesel) only for charging the 
electric accumulator, not capable of being charged by plugging to external source 
of electric power.
Excise (Ordinance) Duty – Excise Ordinance (Chapter 52)
 11.01.2025
Excise Notification No.01/2025 (Gazette Notification No. 2418/42 of 10.01.2025)
-	
To increase the Excise Duty on liquor by 5.9 percent based on an annual inflation 
adjustment indexation.
Tobacco Tax - Tobacco Tax Act, No. 08 of 1999
02.04.2025
Gazette Notification No. 2430/16 of 01.04.2025
-	
To increase tobacco tax applicable on a stick of Beedi from Rs. 2/- per stick to Rs. 
3/- per stick.
CESS Levy – Securities & Exchange Commission of Sri Lanka Act, No.19 of 2021
01.08.2025
Gazette Notification No. 2443/49 of 02.07.2025
-	
To impose a CESS levy of 0.006% on the value of transaction in Listed High Yield 
Corporate Debt Securities and to revise CESS levy of 0.01% divided by 3 on the total 
value of transaction in Corporate Debt Securities.
Customs Import Duty (CID) – Revenue Protection Act, No. 19 of 1962
28.01.2025
Revenue Protection Order No. 01/2025 (Gazette Notification No. 2421/05 of 27.01.2025)
-	
To impose Customs Import Duty of 20 percent or 20 percent with a Specific Rate of 
Duty (Mixed Rate of Duty) on importation of motor vehicles.     
29.04.2025
Revenue Protection Order No. 02/2025 (Gazette Notification No. 2434/02 of 28.04.2025)
-	
To create new National Sub Divisions (NSD) for electric motor vehicles with engine 
used (petrol, diesel or semi-diesel) only for charging the electric accumulator, not 
capable of being charged by plugging to external source of electric power.
BOX 2.1 : Major Fiscal Measures (January – September, 2025) (Contd..)

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38                                                                      Budget, Economic and Fiscal Position Report - 2026
Effective Date
Measures
Customs Surcharge- Customs Ordinance (Chapter 235)
01.02.2025
Gazette Notification No. 2421/43 of 31.01.2025
-	
To impose a surcharge on import duties for the importation of Motor Vehicles.
29.04.2025
Gazette Notification No. 2434/03 of 28.04.2025
-	
To impose 50 percent of surcharge for the newly created National Sub Divisions 
for electric motor vehicles with engine used (petrol, diesel or semi-diesel) only for 
charging the electric accumulator, not capable of being charged by plugging to 
external source of electric power.
Special Commodity Levy (SCL) – Special Commodity Levy Act, No. 48 of 2007
01.01.2025
Gazette Notification No. 2417/20 of 31.12.2024
-	
To extend the validity period of prevailing SCL duty on importation of 63 commodities 
including essential food items till December 31, 2025.
28.01.2025
Gazette Notification No. 2421/03 of 27.01.2025
-	
To grant Duty waiver of Rs.199/- per kg for the importation of Dates considering the 
Ramadan Festive season.
26.08.2025
Gazette Notification No. 2451/10 of 25.08.2025
-	
To increase the SCL rate on importation of Potatoes from Rs. 60/- per kg to Rs. 
80/- per kg and importation of B’ Onions from Rs. 10/- per kg to Rs. 50/- per kg 
considering local harvesting period.
Imports & Exports (Control) Regulations- Imports and Exports (Control) Act, No. 01 of 1969
28.01.2025
Imports and Exports (Control) Regulations No. 01 of 2025 
(Gazette Extraordinary No. 2421/04 of 27.01.2025)
-	
To remove temporary suspension on importation of commercial or goods transport 
vehicles.
01.02.2025
Imports and Exports (Control) Regulations No. 02 of 2025 
(Gazette Extraordinary No. 2421/44 of 31.01.2025)
-	
To remove temporary suspension on importation of motor vehicles including 
personal usage motor vehicles (Cars, Vans, Sport Utility Vehicles, etc.) and to 
impose Import Control License (ICL) requirement for motor vehicles that exceeds 
maximum age limits. 
19.03.2025
Imports and Exports (Control) Regulations No. 03 of 2025 
(Gazette Extraordinary No. 2428/07 of 19.03.2025)
-	
To appoint Bureau Veritas as an authorized inspector for all countries to issue export 
inspection certificates for used motor vehicles and authorize license banks to 
release export inspection certificates of motor vehicles received without the stamp 
of the bank in country of export (required by the Regulation No. 5 of the Gazette 
Extraordinary No. 1804/17 dated April 03, 2013), through online verification.
29.04.2025
Imports and Exports (Control) Regulations No. 04 of 2025 
(Gazette Extraordinary No. 2434/12 of 29.04.2025)
-	
To review the list of items for which the issuance of Import Control License has 
been suspended in terms of the Special Gazette No. 2312/77 dated 01.01.2023 
and remove selected items from the list, and to remove the requirement of Import 
Control License on importation of electric motorcycles unregistered in any country 
(Brand-new). 
05.05.2025
Imports and Exports (Control) Regulations No. 05 of 2025 
(Gazette Extraordinary No. 2435/02 of 05.05.2025)
-	
To Incorporate National Subdivisions of the Harmonized System Codes published 
for electric motor vehicles by the Extraordinary Gazette No. 2434/02 dated April 28, 
2025 in the Imports and Exports (Control) Regulations applicable to the importation 
of Motor Vehicles.
19.05.2025
Imports and Exports (Control) Regulations No. 06 of 2025 
(Gazette Extraordinary No. 2437/04 of 19.05.2025)
-	
To remove the requirement of Import Control License (ICL) for the importation of 
raw non-iodized salt and edible iodized salt (powdered and granular salt), classified 
under the HS Code of 2501.00, until June 10, 2025.*
BOX 2.1 : Major Fiscal Measures (January – September, 2025) (Contd..)

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39   
Effective Date
Measures
15.08.2025
Imports and Exports (Control) Regulations No. 07 of 2025 
(Gazette Extraordinary No. 2449/60 of 15.08.2025)
-	
To extent the validity period of the Import and Export (Control) Regulations No. 
07 of 2024 (Published in the Gazette Extraordinary No. 2384/34 of 17.05.2024) until 
30.09.2025.*
Embarkation Levy - Finance Act, No. 25 of 2003
31.01.2025
Gazette Notification No. 2421/30 of 31.01.2025 
-	
To extend tax exemption period for persons leaving Sri Lanka by aircraft from 
Mattala Rajapaksa International Airport (MRIA) for three years from the date of 
commencement of operations by an International Airline or 28.12.2025 which ever 
comes first.
-	
To extend the concessionary rate of USD 30 on Embarkation Levy for persons 
leaving Sri Lanka by aircraft from CIAR and JIA.
International Telecommunications Operators Levy - Finance Act, No. 11 of 2004
01.04.2025
Gazette Notification No. 2430/14 of 01.04.2025
-	
To extend the current rate of levy payable on Incoming International Calls, Incoming 
International Calls on specific telephone numbers, Incoming Local Access Charge, 
Telecommunication Development Charge and Outgoing Local Access Charge for 
three years from January 01, 2025 to December 31, 2027.
Luxury Tax on Motor Vehicle – Finance Act, No.35 of 2018
01.02.2025
Gazette Notification No. 2421/41 of 31.12.2024
-	
To revise Luxury Tax on Motor Vehicles threshold by Rs. 1.5 million for each fuel 
category except electric.
29.04.2025
Gazette Notification No. 2434/05 of 28.04.2025
-	
To impose Luxury Tax on motor vehicles for the newly created National Sub Divisions 
for electric motor vehicles with engine used (petrol, diesel or semi-diesel) only for 
charging the electric accumulator, not capable of being charged by plugging to 
external source of electric power.
The Colombo Port City Economic Commision Act, No. 11 of 2021
20.09.2025
The Colombo Port City Regulations No. 01 of 2025 
( Gazette Notification No. 2454/62 of 20.09.2025)
-	
To provide guildlines on the grant of exemptions or incentives to businesses of 
strategic importance operating within the area of authority of the Colombo Port 
City.
2.3 Government Expenditure
Government expenditure during first eight 
months of 2025 amounted to Rs. 3,712.5 
billion of which Rs. 3,381.3 billion was 
recurrent expenditure and Rs. 331.2 billion 
was capital and net lending. Government 
expenditure is required to be authorized 
by 
Parliament 
annually. 
Accordingly, 
the Appropriation Act, No. 03 of 2025, 
was passed by Parliament, enabling the 
government to incur expenditure in 2025.
* - This Gazette is currently not effective
TABLE 2.11 : Performance of Government 
Expenditure
Rs. Mn.
Item
Jan-Aug
2024
2025(a)
Recurrent Expenditure
3,041,565 3,381,309 
Salaries
659,502 
760,687 
Pension
254,006 
282,905 
Interest
1,559,721 
1,687,571 
Other
568,336 
650,146 
Capital & Net Lending
435,320 
331,183 
Total Expenditure
3,476,885 3,712,492 
Sources : Department of National Budget and 
Department of Fiscal Policy
(a) Provisional
BOX 2.1 : Major Fiscal Measures (January – September, 2025) (Contd..)

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40                                                                      Budget, Economic and Fiscal Position Report - 2026
Personal Emoluments and Pensions
The expenditure on personal emoluments 
of public servants, including employees 
of Provincial Councils, increased by 15.3 
percent to Rs. 760.7 billion in the first eight 
months of 2025, from Rs. 659.5 billion 
in the same period of 2024. Meanwhile, 
expenditure 
on 
pension 
payments 
increased by 11.4 percent to Rs. 282.9 billion 
in the first eight months of 2025, compared 
to Rs. 254.0 billion in the same period of 
2024. This increase was mainly triggered 
by increased basic salary of public servants 
and pension revisions in line with the 2025 
Budget proposal.
Interest Payments
Interest payments on both domestic and 
foreign debt increased by 8.2 percent to 
Rs. 1,687.6 billion in the first eight months 
of 2025, compared to Rs. 1,559.7 billion 
in the same period of 2024. The interest 
payments on domestic debt increased 
by 0.5 percent to Rs. 1,466.5 billion in the 
first eight months of 2025, compared to 
Rs. 1,459.7 billion in the same period of 
2024. Interest payments on foreign debt 
increased by 121.1 percent to Rs. 221.1 
billion in the first eight months of 2025, 
from Rs. 100.0 billion in the same period of 
2024. 
Welfare expenditure
The 
government 
continued 
the 
strengthening 
of 
social 
safety 
net 
programmes with special attention of 
providing a relief to the vulnerable and 
marginalized segments of society through 
improved targeting and coverage while 
empowering 
them 
to 
improve 
their 
livelihoods.  
In the first eight months of 2025, the total 
welfare spending including social welfare, 
social security, education, health and 
nutrition, development assistance, and 
subsidies for production and labour market 
inclusion increased by 17.7 percent to 
Rs. 629.4 billion compared to Rs. 534.4 billion 
in the same period of 2024. Social welfare 
and social security expenditures amounted 
to Rs. 557.3 billion in the first eight months 
of 2025. This includes a spending of Rs. 112.6 
billion for the “Aswesuma” programme, 
including categorical payments for elderly 
allowance, allowance for differently-abled 
persons and kidney patients’ allowance 
which is a 27.2 percent increase compared 
to the same period of 2024. 
TABLE 2.12 : Behaviour of Yield Rates on Government Securities and Exchange Rate (2024 - 2025)
Period
Treasury Bills (%)
Treasury Bonds (%)
Average 
Exchange 
Rate 
Rs/USD
91 days
182 days
364 days
2 year
3 year
4 year
5 year
2024
Jan
11.97
12.20
12.00
      13.83 
     13.08 
14.21 
13.65 
321.17
Feb
9.87
9.95
10.05
          - 
      10.81 
             - 
11.90 
312.58
Mar
10.07
10.23
10.28
          - 
      11.33 
             - 
12.25 
305.67
Apr
9.61
9.89
9.99
          - 
      11.44          11.72 
12.37 
299.42
May
8.62
9.04
9.18
          - 
          -          11.01               - 
299.69
Jun
10.07
10.19
10.31
          - 
      10.69 
11.90          11.78 
303.81
Jul
9.14
9.34
9.95
          - 
      12.07 
             -               - 
303.76
Aug
9.49
9.84
10.01
          - 
          - 
             - 
12.98 
300.69
Sep
10.49
10.72
10.05
          - 
      13.79 
             - 
13.98 
301.15
Oct
9.35
9.68
9.95
          - 
      11.79 
11.84               - 
293.79
Nov
8.73
8.97
9.08
      11.63 
      10.62 
             - 
11.28 
292.01
Dec
8.62
8.77
8.96
          - 
          -         10.42 
10.75 
291.68
2025
Jan
7.93
8.09
8.47
          - 
          -         10.42 
10.73 
296.18
Feb
7.57
7.87
8.35
          - 
          -         10.63 
          -
296.80
Mar
7.50
7.84
8.25
          - 
          - 
          - 
10.72 
295.91
Apr
7.65
7.97
8.30
          - 
          -         10.30 
10.64 
298.53
May
7.55
7.77
7.98
          - 
       8.85         10.22           9.47 
299.41
Jun
7.55
7.75
7.94
          - 
          -           9.41 
          -
299.90
Jul
7.62
7.91
8.03
          - 
          - 
9.46           9.77 
301.12
Aug
7.58
7.89
8.03
          - 
          - 
          - 
          - 
301.49
Sources : Department of Treasury Operations, Department of Public Debt and Central Bank of Sri Lanka

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Budget, Economic and Fiscal Position Report - 2026	
41   
TABLE 2.13 : Welfare Expenditure 
 
Rs.Mn.
Programme
  Jan.- Aug.
2024 Actual
2025 Provisional
Social Welfare
 76,784
94,426
Medical supplies for Government Hospitals (including Ayurvedha)
45,780
74,952
Health insurance for school children (Suraksha)
1,166
1,376
Agrahara insuarance scheme for pensioners
689
486
Allowance for pre-school teachers
251
490
"Ranaviru Mapiya Rakawarana" allowance
1,451
916
Property loan interest to public servants
1,131
958
Subsidy for economically unprofitable routes, contribution of 
socially obligatory bus services (Sisu sariya, Gami seriya and Nisi 
seriya) and Armed Forces Bus Passes
2,169
2,606
"Suwasariya" - 1990 free ambulance service
1,514
1,686
Interest difference on senior citizens' accounts
20,000
10,000
World Food Programme
632
332
Other
2001
622
Social Security
401,200
462,944
Cash grant for low income families
97,819
98,132
Support for low-income differently abled persons
4,288
9,453
Financial support for elderly people 
8,709
29,769
Financial support for kidney patients
1,852
3,166
Financial assistance to purchase school stationeries
-
2,833
Pension
254,006
282,631
Service compensation for death & injured soldiers
31,088
33,312
Pension for Farmers
3,284
3,523
Other
155
126
Health and Nutrition
16,496
25,442
Thriposha programme
1,551
1,750
Nutritional food package for expectant mothers
4,161
4,196
School nutritional foods programme
9,466
17,894
Morning meal for pre-school children
673
1,342
Other
645
260
Education
15,326
18,931
School texbooks
3,421
1,567
School uniforms
1,039
58
Shoes for students in difficult schools
570
2490
Scholarships – grade 5 students
616
824
Mahapola and bursaries
1,750
3,245
Loan scheme for the students who are unable to get into the state 
universities
1,228
1,335
School & higher education season Tickets
6,125
8,250
Others
577
1,162
Development Subsidies
24,628
27,695
Fertilizer subsidy
24,280
22,625
Other
348
5070
Total
534,434
629,439
Source: Department of National Budget
 
 
Furthermore, government spending  on 
health 
and 
nutrition 
related 
welfare 
programmes increased by 54 percent to 
Rs. 25.4 billion in the first eight months 
of 2025 from Rs. 16.4 billion in the same 
period of 2024 mainly due to the increase 
of spending for school nutrition programme 
with the increase of the coverage of the 
school children for the ‘School Nutritional 
Food Programme’ to all the primary 
schooling children.

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42                                                                      Budget, Economic and Fiscal Position Report - 2026
Public Investment
Public investment was under execution 
in the first eight months of 2025, due to 
various bottlenecks, including delays in 
the disbursement of some foreign loans, 
procurement, land, and environmental 
clearances, and donor concurrences for 
some adjustments of ongoing projects. 
Public investments amounting to over 
Rs. 338.8 billion have been incurred for 
the following infrastructure development 
projects in the first eight months of 2025:
	 i.	Rs. 121.5 billion for the maintenance, 
rehabilitation, and development of 
rural roads, bridges, highways, and 
expressways;
	 ii.	Rs. 18.73 billion for the development 
and expansion of pipeborne water 
supply 
schemes, 
development 
of 
housing schemes, and facilities in 
urban areas;
	 iii.	Rs. 9.96 billion for the rehabilitation and 
improvement of railway fleet, rail roads 
and improving transport network;
	 iv.	Rs. 14.99 billion for the improvement 
of productivity and efficiency in the 
agriculture value chain by introducing 
modern technology; 
	 v.	Rs. 20.23 billion for ensuring water 
security for agriculture purposes, 
mainly by completing infrastructure 
development 
of 
North 
Central 
Province Cannel and constructing and 
maintaining other irrigation-related 
infrastructure; 
	 vi.	Rs. 21.8 billion for the rehabilitation 
and infrastructure development of 
schools, higher education institutions, 
vocational 
training 
centers, 
and 
teacher 
training 
programs, 
with 
the aim of enhancing the quality of 
education;
	vii.	Rs. 19.43 billion for the maintenance 
and development of hospitals and the 
provision of medical equipments to 
hospitals; 
	viii.	Rs. 2.59  billion for the development of 
infrastructure related to provision of 
electricity; and
	 ix.	Rs.42.72 billion as equity contribution 
to 
public 
enterprises, 
including 
National Water Supply and Drainage 
Board, resumption of water supply 
projects terminated due to debt 
restructuring, and Dr. Nevil Fernando 
Hospital.
2.4 Performance of the Cash Flow of the 
General Treasury  
Cash inflows to the General Treasury 
by way of revenue and other receipts 
amounted to Rs. 3,187.5 billion in the first 
eight months of 2025, as against the 
estimation of Rs. 2,989.4 billion, achieving 
the 106.6 percent from the estimate. This 
was an increase of 27.6 percent, compared 
TABLE 2.14 : Government  Treasury Cash Flow Operations
Rs. Bn.
Item
Jan. - Aug.
2024
2025
Actual
Estimate
Actual
Opening Cash balance 
599.5
805.1
805.1
 Total cash inflow from revenue and other receipts 
2,496.8
2,989.4
3,187.4
 Total cash outflow for recurrent payments  
-3,065.0
-3,890.7
-3,292.4
 Total cash outflow for capital payments  
-599.7
-676.1
-327.7
 Net cash surplus / (deficit) 
-1,167.8
-1,577.5
-432.7
 Gross borrowing 
2,306.5
2,569.6
2,295.6
 Debt repayment  
-924.6
-1,286.7
-1,457.6
 Net borrowing 
1,382.0
1,282.8
838.0
 Adjustment account balance (TEB, net deposits, Other Transfer etc.) 
-53.5
             - 
-4.7
Closing Cash balance 
760.1
510.4
1,205.8
Source: Department of Treasury Operations

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Budget, Economic and Fiscal Position Report - 2026	
43   
to Rs. 2,496.8 billion in the same period 
of 2024. Meanwhile, cash outflow for 
both recurrent and public investment 
amounted to Rs. 3,620.2 billion in the first 
eight months of 2025, representing a slight 
decline compared to Rs. 3,664.7 billion 
over the same period of 2024. 
As of August 31, 2025, the net cash deficit 
fell significantly 62.9 percent to Rs. 432.7 
billion, compared to Rs. 1,167.8 billion in the 
same period of 2024. This improvement was 
driven by impressive revenue collection 
and a substantial reduction in capital 
expenditure, reflecting better cash flow 
despite a moderate increase in recurrent 
spending. The 
closing 
positive 
cash 
balance as of August 31, 2025, increased 
significantly to Rs. 1,205.8 billion from Rs. 
760.1 billion recorded as of August 31, 2024 
reflecting an improved overall cash position 
in the country.The increase in cash inflows 
can be attributed to increased revenue 
collections and improved tax compliance. 
Also, a prudent financial management 
and expenditure controls contributed to 
the healthy cash balance. This upward 
trend indicates a positive fiscal outlook 
and enhances the government's capacity 
to meet its financial commitments, invest 
in development projects, and strengthen 
economic stability moving forward.
2.5 Management of Government Debt
The Parliament approved a total gross 
borrowing limit of Rs. 4,000 billion for the 
fiscal year 2025. Of this, Rs. 2,723.5 billion 
was allocated for the period from January 
1 to August 31, 2025. The borrowing was 
sourced from both domestic and foreign 
markets, amounting to Rs. 1,847.8 billion 
and Rs. 281.8 billion respectively. The 
primary objectives of these borrowings 
were to meet debt service obligations and 
to fund various development initiatives.
As of the reporting date, approximately 
86.8 percent of the total borrowings 
in the first eight months of 2025 were 
secured domestically. Treasury Bonds 
were exclusively utilized for domestic 
debt servicing. The utilization of the 
approved borrowing limit during this 
period was recorded at Rs. 2,129.6 billion, 
predominantly through the issuance of 
Treasury Bonds.
Furthermore, the data indicates a net 
negative 
issuance 
of 
Treasury 
Bills 
amounting to Rs. 240.2 billion. This 
suggests that outflows surpassed new 
issuances, implying that cash flow financing 
was employed to reduce the outstanding 
volume of Treasury Bill repayments during 
this period.
TABLE 2.15 :  Gross domestic borrowings 
(January to August 2025)
Rs.Bn.
Instruments
Jan - Aug 2025
Treasury Bonds (Gross 
Borrowing)
             1,847.8 
Total
            1,847.8 
Further, Treasury bill worth Rs. 4,735 billion 
were retired during the period, against 
which a sum of Rs. 4,495 billion was raised 
from the market, resulting in a net negative 
borrowing of Rs. 240 billion by way of 
treasury bills during the period.
2.6 Foreign Financing
Overview
Sri Lanka’s debt restructuring process has 
now largely concluded, which is essential 
in the path to restoring debt sustainability 
and macroeconomic stability. Sri Lanka will 
gain approximately USD 9.5 billion in debt 
service payment reductions over the four-
year IMF programme period, a 31 percent 
reduction in the coupon rate of Sri Lanka’s 
Bonds to 4.4 percent, and an extension of 
the average maturity profile of over five 
years. 
Foreign Financing Commitments
During the period from 1st January to 31st 
August 2025, new commitments have 
not been entered into with bilateral, 
multilateral, 
or 
external 
commercial 
creditors.
Foreign Financing Disbursements and 
Utilization
During the period from 1st January to 
31st August 2025, total foreign loan 
disbursements amounted to USD 938.8 
million. 
Sources : Department of Treasury Operations

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44                                                                      Budget, Economic and Fiscal Position Report - 2026
The largest share of disbursements was 
recorded under the International Monetary 
Fund’s Extended Fund Facility (IMF-EFF), 
accounting for 73 percent of the total. 
This was followed by disbursements under 
loan agreements with the World Bank 
(11 percent) and the Asian Development 
Bank (7 percent). Following the signing of 
bilateral debt restructuring agreements 
with the main bilateral creditors, the 
disbursements were re-commenced, and 
during the period, disbursements from the 
bi-lateral creditors were recorded to USD 
26.4 million. 
In terms of sectoral allocation, the 
Budget Support sector accounted for the 
majority share, representing 65 percent 
of total disbursements, followed by the 
Humanitarian Assistance sector (7 percent) 
and the Water Supply and Sanitation sector 
(5 percent).
TABLE 2.16 : Disbursements of Foreign Loans and Grants (January - August 2025)
Development Partner/ Lending Agency
Disbursements* 
(USD Mn.)
Loan
Bilateral
26.4
Japan
14.3
Saudi Fund
8.1
Co-op Centrale Netherlands
2.6
Korea
1.2
Multilateral
912.4
IMF
681.6
World Bank
107.5
Asian Development Bank
70.4
OPEC Fund
33.9
Asian Infrastructure Investment Bank
17.9
International Fund for Agricultural Development
1.0
Total
938.8
Source:Public debt Management Office                                                                                        
For conversion of disbursements made in different currencies into USD, the exchange rates prevailed on each 
disbursement date have been used 
For conversion of SDR into USD, monthend exchange rate of SDR applied to the end of previous month published by 
CBSL have been used. 
*   Provisional 
682 
108 
70 
34 
18 
14 
8 
3 
1 
1 
IMF
World Bank
Asian Development Bank
OPEC Fund
Asian Infrastructure Investment Bank
Japan
Saudi Fund For Arab Economic Development
Co-op Centrale Netherlands
Korea
International Fund for Agricultural Development
Source: Public Dept Management Office
FIGURE 2.4 : Disbursements from 1st January to 31st August 2025, as per the Development Partners/
Lending Agency (USD Mn.)

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45   
External Debt Stock and External Debt 
Service Payments
External debt of the Government as of 
the end of August 2025 amounted to USD 
37.3 billion1.  Multilateral debt accounts for 
36 percent of total government external 
debt, followed by commercial debt at 34 
percent and bilateral debt at 30 percent. 
Approximately 81 percent of commercial 
debt comprises outstanding International 
Sovereign Bond (ISB) issuances, with the 
remainder consisting of foreign currency 
term financing facilities (syndicated loans).
Among multilateral creditors, the Asian 
Development Bank (ADB) and the World 
Bank (WB) together represented over 83 
percent of the total multilateral debt. With 
respect to bilateral debt, 61 percent was 
held by non-Paris Club creditors, while the 
remaining 39 percent was from Paris Club 
members.
Total debt service payments2  from 1st 
January to 31st August in 2025 amounted 
to USD 1,745.0 million, of which USD 1,036.2 
million was for principal repayments and 
the balance was in lieu of USD 708.8 million 
for the interest payments.
As of the end of August 2025, there were 
no external payment arrears. External 
payment arrears consist of debt-service 
obligations (principal and interest) to 
non-residents that have not been paid at 
the time they are due, as specified in the 
contractual agreements, subject to any 
applicable grace period. However, overdue 
debt and debt service obligations that 
are in dispute will not be considered as 
external payments arrears for the purposes 
of programme monitoring. Arrears resulting 
from the non-payment of debt service, 
for which a rescheduling or restructuring 
agreement is being sought, are excluded 
from this definition3.
707
52
32
31
28
23 19
47
Budget Support
Humanitarian Assistannce
Water Supply & Sanitation
Science & Technology
Roads and Bridges
Ground Transport
Housing & Urban Development
** Other
Source: Public Debt Management Office
** Other = Agriculture, Education & Training, Health & Social Welfare, Land Development, Power & Energy, Rural Development
1 Provisional, Only the Central Government outstanding 
Foreign Debt are depicted.
   - Included unpaid Principal accumulated from the date 
of debt standstill policy was adopted.
 - Non-resident holdings of T-bill / T-bonds are not 
included.
   - Outstanding amounts of ISBs have not been classified 
on the current resident/ non-resident basis of their 
holdings.
2 Debt Service = Principal Payments + Interest Payments
3 Source: IMF Country Report No. 25/162, dated July 2025
FIGURE 2.5 : Disbursements from 1st January to 31st August 2025, as per the 
Major Economic Sector (USD Mn.)

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Budget, Economic and Fiscal Position Report - 2026	
49   
3.1 Overview
In the first half of 2025, the Sri Lankan 
economy 
further 
strengthened 
with 
notable outcomes in all spectra of the 
economy while remaining resilient to 
both domestic and external headwinds. 
The economy grew by 4.8 percent in 
the first half of 2025, with a broad-based 
recovery across all sectors of the economy, 
including Agriculture, Industry, Services 
and Taxes less Subsidies. Inflation has 
turned to positive territory to 1.5 percent 
and 2.1 percent in September and October 
2025, respectively, after remaining in 
negative territory for 11 months.  Gross 
official reserves reached USD 6.2 billion at 
the end of September 2025.  The external 
sector remained resilient to shocks amid 
heightened trade policy uncertainty and 
geopolitical 
headwinds. 
The 
current 
account balance in the external sector 
recorded a surplus of USD 2 billion in 
the first eight months of 2025, driven 
largely by the increased  inflows from 
tourism and workers’ remittances. The 
debt restructuring process has been 
largely 
concluded 
providing 
a 
path 
towards restoring debt sustainability. The 
government is on the track to address the 
structural bottlenecks of the economy to 
unlock the potential growth.
Broad and much-needed reform measures 
have been implemented to enhance 
transparency and accountability across all 
sectors, supported by a comprehensive 
anti-corruption drive, the improvements 
in 
macroeconomic 
conditions 
while 
preserving policy continuity with necessary 
adjustments.  Fitch Ratings upgraded Sri 
Lanka’s Long-Term Foreign-Currency Issuer 
Default Rating (IDR) to ‘CCC+’ from ‘RD’ 
(Restricted Default), Moody’s Investors 
Service raised its Long-Term Foreign-
Currency Issuer Rating to ‘Caa1’ from ‘Ca’, 
and S&P Global Ratings upgraded the 
country’s long-term and short-term foreign 
currency ratings to ‘CCC+/C’ from ‘SD/
SD’, reflecting investors’ confidence in Sri 
Lanka’s economic recovery and reform 
efforts. 
Easing monetary conditions, increased 
public 
and 
informal 
sector 
wages, 
increased credit to private sector, and 
the removal of vehicle import restrictions 
in February 2025, supported a strong 
recovery in domestic demand
Economic activities surged with the 
expansion of industrial sector supported 
by strong performances in manufacturing, 
mining and construction activities and the 
expansion of services sector, supported 
by robust growth in financial services, 
insurance, and the recovery of tourism 
sector.
The unemployment rate declined to 
3.8 percent in the first quarter of 2025 
compared to 4.5 percent recorded in the 
first quarter of 2024 due to the decline in 
in both male and female unemployment 
rates to 2.5 percent and 6.3 percent, 
respectively. Meanwhile, the labour force 
participation rate increased to 49.7 percent 
in the first quarter of 2025 compared to 
47.1 percent in the first quarter of 2024 due 
to the increases in both male and female 
labour force participation rates to 70.1 
percent and 32.0 percent, respectively.
FIGURE  3.1 : GDP Growth 
Source : Department of Census and Statistics
Source : Department of Census and Statistics
FIGURE  3.2 : Composition of GDP - First Half of 
2025 
-10.7
-3.1
1.8
4.3
5.1
4.1
5.3
5.4
4.8
4.9
-13
-8
-3
2
7
12
17
2023
Q1
2023
Q2
2023
Q3
2023
Q4
2024
Q1
2024
Q2
2024
Q3
2024
Q4
2025
Q1
2025
Q2
GDP Growth  (%)
FIGURE  3.1 : GDP Growth
Agriculture,
Forestry and 
Fishing
7%
Industries
28%
Services
58%
Taxes less 
Subsidies on 
Products
7%

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50                                                                      Budget, Economic and Fiscal Position Report - 2026
The Central Bank moved to a single policy 
interest rate mechanism with effect from 
November 27, 2024, replacing its dual policy 
interest rate mechanism and introduced 
the Overnight Policy Rate (OPR) as the 
primary monetary policy tool to signal and 
operationalize its monetary policy stance 
henceforth, which was initially set at 8.00 
percent. The Central Bank maintained an 
accommodative monetary policy stance 
throughout 2025, reducing the OPR to 7.75 
percent by end-May 2025. The policy rate 
has since been maintained at this level, as 
the current monetary stance is deemed 
consistent with guiding inflation towards 
the 5.0 percent medium-term target 
while supporting the ongoing economic 
recovery.
Headline 
inflation, 
as 
measured 
by 
the year-on-year (Y-o-Y) change in the 
Colombo Consumer Price Index (CCPI, 
2021=100), rose to 2.1 percent in October 
2025 from 1.5 percent in September 
2025, following nearly a year of deflation. 
Food inflation (Y-o-Y) accelerated to 2.9 
percent in September 2025, while non-
food inflation (Y-o-Y) remained steady at 
0.7 percent. Forward projections indicate a 
gradual pickup in inflation over the coming 
months, converging towards the medium-
term target of 5 percent, supported by 
the continuation of appropriate monetary 
and 
fiscal 
policies. 
Meanwhile, 
core 
inflation (Y-o-Y), which reflects underlying 
inflationary trends, remained unchanged at 
2.0 percent in September 2025.
Supporting 
the 
ongoing 
economic 
recovery, the stock market recorded a 
notable improvement in performance. 
The All Share Price Index (ASPI, 1985=100) 
increased by 48.4 percent (Y-O-Y), reaching 
18,027 points, while the Standard & Poor’s 
Sri Lanka 20 Index (S&P SL20, 2004=1,000) 
rose by 49.2 percent (Y-O-Y) to 5,353 points 
by end-June 2025, reflecting renewed 
investor confidence and improved market 
sentiment.
The 
external 
sector 
demonstrated 
improved performance during the first 
eight months of 2025. Merchandise exports 
grew by 6.7 percent to USD 9.1 billion, 
compared to USD 8.5 billion in the same 
period of 2024, reflecting stronger external 
demand and recovery in key export 
industries. Merchandise imports increased 
by 10.5 percent to USD 13.3 billion in the 
first eight months of 2025, up from USD 
12.1 billion in the same period a year earlier, 
driven mainly by higher domestic demand 
and the relaxation of import restrictions. 
Consequently, the merchandise trade 
deficit widened to USD 4.3 billion in the 
first eight months of 2025, compared to 
USD 3.6 billion in the same period of 2024.
Workers’ remittances recorded a substantial 
increase of 19.3 percent, reaching USD 5.1 
billion in the first eight months of 2025, 
compared to USD 4.3 billion in the same 
period of 2024, reflecting stronger inflows 
from major migrant destinations. Tourism 
earnings also rose by 5.7 percent to USD 
2.3 billion in the first eight months of 2025, 
up from USD 2.2 billion in the same period 
a year earlier, supported by higher tourist 
arrivals and improved spending per visitor. 
Consequently, net inflows from the services 
sector expanded to USD 2.7 billion during 
the first eight months of 2025, compared 
to USD 2.6 billion in the same period of 
2024.
Gross Official Reserves (GOR) stood at 
USD 6.2 billion at the end of September of 
2025, including the swap facility with the 
People’s Bank of China (PBOC), despite 
ongoing debt service obligations. The 
Sri Lankan rupee had depreciated by 3.3 
percent year-to-date against the US dollar 
as of end-September 2025.
3.2 Economic Growth
The economy expanded by 4.8 percent 
in the first half of 2025 benefiting from 
the positive growth in all sectors of 
the economy i.e., Agriculture, Industry, 
Services and Taxes less Subsidies. The 
Agriculture sector grew marginally by 0.6 
percent in the first half of 2025, compared 
to the growth of 1.8 percent in the same 
period of 2024. The Industry sector 
expanded moderately by 7.9 percent in the 
first half of 2025, compared to the growth 
of 10.5 percent in the first half of 2024. The 
Services sector modestly expanded by 3.3 
percent in the first half of 2025, compared 
to the growth of 2.3 percent in the same 
period of 2024. In value added terms,

BEFPR 2026 · file page 65 printed page 51

Budget, Economic and Fiscal Position Report - 2026	
51   
taxes less subsidies on products increased 
by 10.6 percent in the first half of 2025 
compared to the increase of 6.4 percent in 
the same period of 2024.
Agriculture
The agriculture sector contributing  8.8 
percent to GDP, recorded a marginal 
growth of 0.6 percent in the first half of 
2025, compared to the growth of 1.8 
percent in the same period of 2024. This 
was mainly owing to the positive growth 
in sub-sectors such as growing of cereals 
(except rice), animal production, plant 
propagation, forestry and logging, and 
marine fishing and marine aquaculture. 
However, subsectors such as the growing 
of oleaginous fruits (coconut, king coconut, 
oil palm), growing of rubber, and freshwater 
fishing 
and 
fresh 
water 
aquaculture 
contracted significantly during the period.
Rs. Mn.
Sector
2022(b)
2023(b)
2024(a)
First half 
Growth (%)
2024(b)
2025(a)
2024(b)
2025(a)
Agriculture, Forestry and Fishing
911,252 
925,822        937,104 
466,927
469,935 
1.8
0.6 
1
Growing of Cereals (except rice)
16,507 
16,920 
18,758 
9,573
10,100
17.1
5.5
2
Growing of Rice
94,730 
110,946 
114,369 
56,261
57,599
5.5
2.4
3
Growing of Vegetables
103,161 
106,135 
109,069 
52,499
52,077
-0.1
-0.8
4
Growing of Sugar Cane, Tobacco 
and Other Non-perennial Crops
3,803 
3,515 
3,187 
1,555
1,570
-11.3
1.0
5
Growing of Fruits
73,310 
78,076 
81,548 
40,368
41,163
4.0
2.0
6
Growing of Oleaginous Fruits 
(Coconut, King Coconut, Oil Palm)
111,196 
104,725 
92,703 
51,171
44,931
-1.5
-12.2
7
Growing of Tea (Green Leaves)
62,867 
61,912 
62,953 
30,635
32,428
-6.4
5.9
8
Growing of Other Beverage Crops 
(Coffee, Cocoa etc,.)
1,229 
1,136 
1,110 
555
596
-2.3
7.4
9
Growing of Spices, Aromatic, 
Drug and Pharmaceutical Crops
101,653 
99,729 
101,653 
49,583
50,576
2.8
2.0
10
Growing of Rubber
 23,871 
  22,024 
22,503 
11,942
9,903
-3.6
-17.1
11
Growing of Other Perennial Crops
27,533 
  29,440 
25,949 
12,942
12,862
-12.4
-0.6
12
Animal Production
83,307 
  83,587 
95,363 
45,455
52,860
9.2
16.3
13
Plant Propagation
        965 
          728 
      626 
311
339
-26.1
8.8
14
Agriculture supporting activities
33,062 
  32,888 
 31,868 
17,659
18,256
-2.5
3.4
15
Forestry and Logging
 50,931 
   47,221 
46,209 
22,378
23,892
-0.8
6.8
16
Marine Fishing and Marine 
Aquaculture
95,447 
 100,099 
104,947 
51,374
54,042
4.2
5.2
17
Fresh Water Fishing and Fresh 
Water Aquaculture
27,682 
  26,739 
24,290 
12,665
6,740
11.9
-46.8
Industries
3,308,573 3,002,968    3,333,008 1,654,609   1,785,503 
10.5
7.9
18
Mining and Quarrying
198,613 
 154,303 
184,166 
88,929
101,795
14.2
14.5
19
Manufacture of Food, Beverages 
and Tobacco Products
869,371 
899,739 
954,409 
471,506
490,008
8.8
3.9
20
Manufacture of Textile, Wearing 
Apperal and Leather Related 
products
511,860 
450,438 
500,210 
249,361
284,023
6.5
13.9
21
Manufacture of Wood and 
Products of Wood and Cork, 
except Furniture
29,758 
  23,807 
24,975 
11,646
11,766
12.1
1.0
22
Manufacture of Paper Products, 
Printing and Reproduction of 
Media Products
52,069 
  47,259 
48,734 
26,922
30,789
-0.2
14.4
23
Manufacture of Coke and Refined 
Petroleum Products
   6,474 
   21,895 
 19,690 
11,349
12,485
5.8
10.0
TABLE 3.1 : Sectoral Composition of GDP at Constant (2015) Prices

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52                                                                      Budget, Economic and Fiscal Position Report - 2026
Rs. Mn.
Sector
2022(b)
2023(b)
2024(a)
First half 
Growth (%)
2024(b)
2025(a)
2024(b)
2025(a)
24
Manufacture of Chemical Products 
and Basic Pharmaceutical 
Products
82,349 
  82,949 
90,994 
50,241
48,742
21.5
-3.0
25
Manufacture of Rubber and Plastic 
Products
67,505 
   56,157 
60,972 
31,093
32,445
8.2
4.3
26
Manufacture of Other Non-
metallic Mineral Products
 85,182 
  84,670 
 86,813 
45,546
54,727
4.3
20.2
27
Manufacture of Basic Metals and 
Fabricated Metal Products
58,780 
  60,303 
70,963 
31,080
34,076
39.2
9.6
28
Manufacture of Machinery and 
Equipment
  59,181 
  50,229 
53,372 
22,068
23,503
3.2
6.5
29
Manufacture of Furniture
60,837 
  56,089 
 61,740 
36,648
40,118
6.6
9.5
30
Other Manufacturing and Repair 
and Installation of Machinery and 
Equipment
79,088 
  66,747 
72,427 
42,375
39,275
9.7
-7.3
31
Electricity, Gas, Steam and Air 
Conditioning Supply
178,059 
 174,017 
185,978 
95,721
99,926
13.2
4.4
32
Water Collection, Treatment and 
Supply
 14,059 
    11,590 
  11,906 
6,504
6,818
5.2
4.8
33
Sewerage, Waste, Treatment and 
Disposal Activities
28,070 
  27,955 
 28,319 
13,135
14,114
3.8
7.5
34
Construction
927,319 
 734,821 
877,339 
420,486
460,892
13.7
9.6
Services
7,217,485 7,206,496    7,381,059 3,560,132  3,677,533 
2.3
3.3
35
Wholesale and Retail Trade
1,675,528 
1,677,941 
1,700,232 
853,201
865,889
1.1 
1.5
36
Transport of Goods and Passenger 
including Warehousing
1,364,677 
1,422,786 
1,464,296 
713,291
736,020
3.3
3.2
37
Postal Courier Activities
 19,780 
  20,349 
 21,627 
10,621
11,496
8.1
8.2
38
Accomodation, Food and 
Beverage Service Activities
166,030 
 209,172 
274,921 
128,642
144,995
34.4
12.7
39
Programming and Broadcasting 
Activities and Audio Video 
Productions
37,350 
   36,551 
37,767 
19,331
19,601
3.7
1.4
40
Telecommunication
140,524 
 137,403 
143,109 
70,575
72,675
4.0
3.0
41
IT Programming Consultancy and 
Related Activities
238,455 
 187,341 
198,512 
97,678
109,916
2.3
12.5
42
Financial Service Activities and 
Auxiliary Financial Services
529,744 
 475,201 
482,557 
233,540
264,876
-0.2
13.4
43
Insurance, Reinsurance and 
Pension Funding
 78,187 
 103,519 
89,030 
45,378
51,623
-8.7
13.8
44
Real Estate Activities, Including 
Ownership of Dwelling
554,456 
 521,463 
543,265 
275,632
284,487
4.4
3.2
45
Professional Services
248,467 
254,360 
263,382 
117,330
120,480
3.9
2.7
46
Public Administration and 
Defence; Compulsory Social 
Security
629,031 
 618,542 
600,314 
281,558
274,577
-3.7
-2.5
47
Education
302,435 
 307,712 
314,755 
161,451
162,759
2.4
0.8
48
Human Health Activies, 
Residential Care and Social Work 
Activies
237,677 
236,087 
234,358 
100,252
102,569
-1.8
2.3
49
Other Personal Service Activies
995,147 
998,069 
1,012,933 
451,649
455,567
1.1
0.9
Gross Value Added (GVA), at 
basic prices
11,437,311 11,135,286    11,651,170 5,681,668   5,932,971 
4.5
4.4
(+) Taxes less Subsidies on 
Products
723,576 
742,270 
821,299 
386,605
427,676
6.4
10.6
Gross Domestic Product(GDP) at 
market prices
12,160,886 11,877,556  12,472,469 6,068,273   6,360,647 
4.6
4.8
Source : Department of Census and Statistics
(a)  Provisional 
(b)  Revised
TABLE 3.1 : Sectoral Composition of GDP at Constant (2015) Prices (Contd..)

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Budget, Economic and Fiscal Position Report - 2026	
53   
Rice
The growing of rice subsector expanded 
marginally by 2.4 percent in the first half 
of 2025 compared to the 5.5 percent 
expansion in the same period of 2024. 
The paddy production for the 2024/2025 
Maha season, based on the sown extent 
reported as of end-March 2025, was 
2.62 million metric tons of paddy, a 3.8 
percent decline from the 2023/2024 
Maha season. This decline in production 
can be attributed to flood-related paddy 
damage, pest and disease infestations, and 
yellowing. However, the paddy production 
for the 2025 Yala season, based on the 
sown extent reported as of end-July 2025, 
was 2.2 million metric tons, which is an 
11.7 percent increase from the 2024 Yala 
season. The increase in production during 
the Yala season can be attributed to the 
expansion of sown area due to sufficient 
water availability during the season.
Tea, Rubber and Coconut
The growing of tea subsector expanded by 
5.9 percent in first half of 2025, compared 
to the contraction of 6.4 percent in the 
same period of 2024. The tea production 
in the first half of 2025, increased by 5.5 
percent to 134.9 million kg compared to 
the production of 128.0 million kg in the 
first half of 2024. This increase can be 
mainly attributed to favourable weather 
conditions. 
The 
growing 
of 
rubber 
subsector contracted significantly by 17.1 
percent in the first half of 2025, compared 
to the marginal contraction of 3.6 percent 
in the same period of 2024. Rubber 
production in the first half of 2025, dropped 
moderately by 12.4 percent to 32.4 million 
kg compared to 37.0 million kg in the same 
period of 2024. Further, the growing of 
oleaginous fruits (coconut, king coconut, 
and oil palm) subsector also contracted 
by 12.2 percent in the first half of 2025, 
compared to the contraction of 1.5 percent 
in the same period of 2024. Accordingly, 
coconut production contracted by 12.8 
percent to 1,351 million nuts in the first 
half of 2025, compared to the coconut 
production of 1,549 million nuts in the same 
period of 2024.
Growing of Cereals 
(except rice)
2.1%
Growing of Rice
12.3%
Growing of Vegetables
11.1%
Growing of Sugar Cane, 
Tobacco and Other Non-
perennial Crops
0.3%
Growing of Fruits
8.8%
Growing of Oleaginous 
Fruits ( Coconut, King 
Coconut, Oil Palm)
9.6%
Growing of Tea 
(Green Leaves)
6.9%
Growing of Other 
Beverage Crops (Coffee, 
Cocoa etc,.)
0.1%
Growing of Spices, 
Aromatic, Drug and 
Pharmaceutical Crops
10.8%
Growing of Rubber
2.1%
Growing of Other 
Perennial Crops
2.7%
Animal Production
11.2%
Plant Propagation 
0.1%
Agriculture supporting 
activities
3.9%
Forestry and Logging
5.1%
Marine Fishing and Marine 
Aquaculture
11.5%
Fresh Water Fishing and 
Fresh Water Aquaculture
1.4%
FIGURE  3.3 : Composition of Agriculture Sector -  First Half of 2025
Source : Department of Census and Statistics

BEFPR 2026 · file page 68 printed page 54

54                                                                      Budget, Economic and Fiscal Position Report - 2026
Cereals, Vegetables, Fruits, Spices and 
Pharmaceutical Crops
The growing of cereals (except rice) subsector 
grew marginally by 5.5 percent in the first 
half of 2025, compared to the growth of 17.1 
percent in the same period of 2024. Growing 
of vegetables subsector contracted by 0.8 
percent in the first half of 2025, compared to 
the insignificant contraction of 0.1 percent in 
the same period of 2024, whereas growing 
of fruits subsector grew by 2.0 percent 
in the first half of 2025, compared to the 
4.0 percent growth in the same period of 
2024. Growing of spices, aromatic, drug, 
and pharmaceutical crops subsector also 
expanded by 2.0 percent in the first half 
of 2025 compared to the expansion of 2.8 
percent in the same period of 2024.
Fisheries and Livestock
The marine fishing and marine aquaculture 
subsector expanded by 5.2 percent in 
the first half of 2025, compared to the 
expansion of 4.2 percent in the same period 
of 2024. However, the freshwater fishing and 
freshwater aquaculture subsector contracted 
significantly by 46.8 percent in the first half 
of 2025, compared to the growth of 11.9 
percent in the same period of 2024. The 
total fish production (marine and inland) 
decreased to 186 million kg in the first half 
of 2025, compared to the production of 204 
million kg in the same period of 2024, owing 
to the significant decline in inland fishing 
activities. The animal production subsector 
grew moderately by 16.3 percent in the first 
half of 2025, compared to the growth of 9.2 
percent recorded in the same period of 2024.
Industry and Manufacturing
The Industry sector, which contributes 26.0 
percent of the GDP, recorded a positive 
growth of 7.9 percent in the first half of 2025, 
compared to the positive growth of 10.5 
percent recorded in the same period of 2024. 
This was largely attributable to the expansion 
in construction, mining and quarrying, 
manufacture of textiles, wearing apparel 
and leather related products, manufacture 
of other non-metallic mineral products, and 
electricity, gas, steam and air conditioning 
supply subsectors which recorded positive 
growth rates of  9.6 percent, 14.5 percent, 
13.9 percent, 20.2 percent and 4.4 percent, 
respectively.
The subsectors such as the manufacture 
of food, beverages and tobacco products 
(3.9 percent), the manufacture of wood 
and products of wood and cork, except 
furniture (1.0 percent), the manufacture of 
paper products, printing and reproduction 
of media products (14.4 percent), the 
manufacture of coke and refined petroleum 
products (10.0 percent), the manufacture of 
rubber and plastic products (4.3 percent), 
the manufacture of basic metals and 
fabricated metal products (9.6 percent), the 
manufacture of machinery and equipment 
(6.5 percent), the manufacture of furniture 
(9.5 percent), water collection, treatment 
and supply (4.8 percent), and sewerage, 
waste treatment , and disposal activities (7.5 
percent) also expanded in the first half of 
2025, compared to the same period of 2024.
However, the manufacture of chemical 
products and basic pharmaceutical products 
subsector contracted by 3.0 percent in the 
first half of 2025, compared to the significant 
growth of 21.5 percent recorded in the 
same period of 2024. Further, the other 
manufacturing, and repair and installation 
of machinery and equipment subsector also 
contracted by 7.3 percent in the first half of 
2025, compared to the growth of 9.7 percent 
in the same period of 2024.
Total power generation increased by 4.7 
percent to 8,675 GWh in the first half of 
2025, compared to 8,284 GWh in the 
corresponding period of 2024. The sale of 
electricity to industries increased by 2.3 
percent to 2,315 GWh in the first half of 2025, 
compared to 2,263 GWh in the same period 
of 2024, reflecting expansion in industrial 
activities.

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Budget, Economic and Fiscal Position Report - 2026	
55   
Source : Department of Census and Statistics
FIGURE 3.5 : Composition of Manufacturing Sector - First Half of 2025
FIGURE  3.4 : Composition of Industry Sector - First Half of 2025
Food, Beverages and 
Tobacco Products
44.5%
Textile, Wearing Apperal 
and Leather Related 
products
25.8%
Chemical Products and 
Basic Pharmaceutical 
Products
4.4%
Rubber and Plastic 
Products
2.9%
Other Non-metallic Mineral 
Products
5.0%
Machinery and Equipment
2.1%
Furniture
3.6%
Other
11.7%
Mining and 
Quarrying
6%
Manufacturing
62%
Electricity, Gas, 
Steam and Air 
Conditioning Supply
5%
Water Collection, 
Treatment and 
Supply
0.38%
Sewerage, Waste, 
Treatment and 
Disposal Activities
1%
Construction
26%
Source : Department of Census and Statistics
25.8%
5.7%
0.8%
0.4%
5.6%
61.7%

BEFPR 2026 · file page 70 printed page 56

56                                                                      Budget, Economic and Fiscal Position Report - 2026
Electricity generation through hydropower 
increased moderately by 18.9 percent 
to 2,975 GWh in the first half of 2025, 
compared to 2,503 GWh in the same period 
of 2024. Electricity generation from wind 
also increased by 8.0 percent to 166 GWh 
in the first half of 2025, compared to 154 
GWh in the same period of 2024. However, 
electricity generation from fuel oil declined 
significantly by 28.8 percent, while coal-
based generation dropped moderately by 
8.9 percent in the first half of 2025. In the first 
half of 2025, electricity generation by the 
private sector increased significantly by 23.1 
percent to 2,233 GWh compared to 1,814 
GWh in the same period of 2024.
Services
The Services sector, which accounted for 
55.2 percent of  GDP, recorded a marginal 
growth of 3.3 percent in the first half of 
2025, compared to the marginal growth 
of 2.3 percent in the same period of 2024. 
The growth was primarily driven by notable 
expansions in accommodation, food and 
beverage 
service 
activities 
(12.7%), 
IT 
programming, 
consultancy 
and 
related 
activities (12.5%), and financial service and 
auxiliary financial service activities (13.4%).
Sub-Sectors of wholesale and retail trade 
(1.5 percent), transportation of goods and 
passengers, including warehousing (3.2 
percent), postal and courier activities (8.2 
percent), programming and broadcasting 
activities and audio video production (1.4 
percent), telecommunication (3.0 percent), 
Insurance, reinsurance and pension funding 
(13.8 percent), real estate activities, including 
ownership 
of 
dwellings 
(3.2 
percent), 
professional services (2.7 percent), education 
(0.8 percent), human health activities, 
residential care and social work activities 
(2.3 percent), and other personal service 
activities (0.9 percent), also expanded in 
the first half of 2025. However, the public 
administration and defense, compulsory 
social security subsector contracted by 2.5 
percent in the first half of 2025. 
Wholesale and Retail 
Trade,Transportation and 
Storage, Accommodation 
and Food Service 
Activities 
47.8%
Information and 
Communication
5.5%
Financial and Insurance 
Activies
8.6%
Real Estate Activities
7.7%
Professional Services
3.3%
Public Administration, 
Defence,Education,Huma
n Health and Social Work 
Activies
14.7%
Other Services
12.4%
p
Source : Department of Census and Statistics
FIGURE 3.6 : Composition of Services Sector - First Half of 2025

BEFPR 2026 · file page 71 printed page 57

Budget, Economic and Fiscal Position Report - 2026	
57   
Transportation and Port Services
The transport sector expanded by 3.2 
percent in the first half of 2025. The total 
number of new vehicle registrations 
increased dramatically by 264.6 percent to 
96,056 in the first half of 2025, compared 
to 26,345 in the same period of 2024.
The 
registration 
of 
three-wheelers 
increased by 7,460.5 percent, motor 
cars increased by 2,110.1 percent, buses 
increased by 381.6 percent, dual-purpose 
vehicles increased by 301.4 percent, 
motorcycles increased by 226.1 percent, 
goods transport vehicles increased by 96.8 
percent, and land vehicles increased by 
56.7 percent in the first half of 2025.
Total containers handled increased by 
2.1 percent in the first half of 2025 to 
3.9 million Twenty-foot Equivalent Units 
(TEUs), compared to 3.8 million TEUs in the 
same period of 2024. Domestic container 
handling increased by 16.2 percent, and 
restowing container handling increased 
TABLE 3.2 : Selected Indicators of Services Sector 
Indicator
2021
2022
2023
2024(a)
2024(a)
2025(a)
Port Services
Jan-Aug
Jan- Aug
Vessels Arrived (No) 
4,180 
4,073 
4,809 
4,562 
2,987 
3,335 
Total Cargo Handled (MT ‘000)
109,356 
100,376 
103,794 
120,203 
80,713 
82,370 
Total Container Handled (TEU ‘000)
7,249 
6,862 
6,950 
7,792 
5,141 
5,435 
Transshipment (TEU ‘000)(b)
6,050 
5,832 
5,754 
6,623 
4,386 
4,577 
Telecommunication Sector
  End June   End June 
Fixed Telephone Lines (No.'000)
2,852 
2,651 
2,308 
2,122 
2,155 
2,142 
Cellular Phones (No.‘000)
29,959 
28,838 
28,986 
28,820 
29,005 
29,027 
Wireless Phones (No.‘000)
1,587 
1,388 
1,163 
1,046 
1,063 
1,074 
Internet and E-mail Subscribers 
(No. ‘000)
22,106 
21,668 
22,864 
23,149 
23,349 
23,686 
Health Sector
Private Hospitals
243
250
n.a.
n.a.
n.a.
 n.a. 
Public Hospitals
618
617
n.a.
n.a.
n.a.
 n.a. 
No. of Beds (Government)
78,228
78,228
n.a.
n.a.
n.a.
 n.a. 
No. of Doctors (Government) 
20,209
21,045
n.a.
n.a.
n.a.
 n.a. 
No. of Nurses (Government)
39,091
40,775
n.a.
n.a.
n.a.
 n.a. 
Financial Sector
   End June   End June 
Bank Branches and  Other Outlets 
7,369 
7,378 
7,522 
7,613 
7,602 
7,489 
Credit Cards in Use 
2,054,985 2,054,896 1,987,857 1,990,271 
1,926,931 2,093,738 
   End Aug    End Aug 
Licensed Finance Companies (e )
39 
37 
33 
32 
33 
32 
Specialised Leasing Companies
3 
1 
1 
1 
1 
1 
Tourism Sector
 Jan - Aug  Jan - Aug 
Tourist Arrivals
194,495 
719,978 1,487,303 2,053,465 1,362,668 
1,566,523 
Tourist Earnings (USD Million)
507 
1,136 
2,068 
3,169 
2,167 
2,290 
Room Occupancy Rate 
18.6 
30.4 
39.0 
 n.a. 
 n.a. 
 n.a. 
Transport Services (New Registration)
 Jan-Aug  
 Jan- Aug  
Buses
281 
404 
685 
146 
111 
853 
Cars
3,495 
1,489 
1,816 
1,644 
964 
26,894 
Goods Transport Vehicles(c )
2,593 
940 
523 
1,284 
790 
1,700 
Motor Cycles
8,011 
9,060 
20,200 
65,289 
35,336 
127,745 
Three Wheelers
2,093 
36 
60 
94 
50 
5,967 
Tractors and Trailers(d)
12,616 
5,285 
4,020 
5,070 
3,190 
5,176 
Other (f)
586 
883 
642 
3,246 
Source : Central Bank of Sri Lanka, Department of Motor Traffic, Telecommunications Regulatory 
Commission of Sri Lanka, Sri Lanka Ports Authority
(a)  Provisional
(b)  Includes re-stowing
(c)  Includes special purpose vehicles, motor lorry and lorry others
(d)  Includes land vehicles and Lorry Trailers
(e) Excluding ETI Finance Ltd
(f) Includes dual purpose vehicles, quadricycles and motor homes

BEFPR 2026 · file page 72 printed page 58

58                                                                      Budget, Economic and Fiscal Position Report - 2026
by 4.6 percent, whereas transshipment 
container handling decreased by 0.4 
percent in the first half of 2025. 
The total number of cargo handled 
increased by 2.1 percent to 60.8 million 
metric tons in the first half of 2025, compared 
to 59.5 million metric tons in the same 
period of 2024. Cargo discharge increased 
by 3.0 percent to 33.7 million metric tons 
in the first half of 2025, compared to 32.7 
million metric tons in the same period of 
2024. Cargo loaded also increased by 1.0 
percent to 27.0 million metric tons in the 
first half of 2025 compared to 26.7 million 
metric tons in the same period of 2024.
Telecommunication
The 
telecommunication 
subsector 
recorded a growth of 3.0 percent in the 
first half of 2025. Telephone penetration, 
including 
cellular 
phones, 
decreased 
marginally by 1.0 percent to 141.8 per 100 
persons as of end-June 2025, compared to 
143.2 per 100 persons as of  end-June 2024. 
Internet subscribers including, mobile 
internet connections increased by 1.4 
percent to 23.7 million as of end-June 2025, 
compared to 23.3 million at end-June 2024. 
As of end-June 2025, the number of fixed-
line telephones decreased marginally by 
0.6 percent, while the number of cellular 
phones increased marginally by 0.1 percent 
as of end-June 2024 .
Unemployment
In 
the 
first 
quarter 
of 
2025, 
the 
unemployment rate decreased to 3.8 
percent, 
compared 
to 
4.5 
percent 
recorded in the first quarter of 2024. The 
unemployment rate among females and 
males in the first quarter of 2025 was 
recorded at 6.3 percent and 2.5 percent, 
respectively. 
Meanwhile, 
the 
youth 
unemployment rate (ages 15 - 24 years) for 
the first quarter of 2025 was recorded as 
19.7 percent, marking the highest reported 
unemployment rate across all age groups. 
Among all age groups, unemployment 
among females is higher than that among 
males.
Meanwhile, the labour force participation 
rate increased slightly to 49.7 percent in 
the first quarter of 2025, compared to 47.1 
percent in the first quarter of 2024. Labour 
force participation rate among females 
and males in the first quarter of 2025 was 
recorded at 32.0 percent and 70.1 percent, 
respectively.
TABLE 3.3 : Performance of Tourism Sector
Month
Tourist Arrivals
Tourist Earnings (USD Mn. )
2021
2022
2023
2024
2025(a)
2021
2022
2023
2024(b)
2025(a)
January
1,682
82,327
102,545
208,253
252,761
4.4
151.7
153.5
341.8
400.7
February
3,366
96,507
107,639
218,350
240,217
8.8
169.4
161.6
345.7
367.6
March
4,581
106,500
125,495
209,181
229,298
11.9
161.2
188.8
338.4
354.0
April
4,168 
62,980 
105,498       148,867 
     174,608 
10.9
108.7
148.2
225.7
256.7
May
1,497 
30,207 
83,309        112,128 
      132,919 
3.9
43.5
100.0
154.0
164.1
June
1,614 
32,856 
100,388        113,470       138,241 
4.2
45.0
122.9
151.1
169.5
July
2,429 
47,293 
143,039 
      187,810 
    200,244 
6.3
85.0
219.0
328.3
318.5
August
5,040 
37,760 
136,405       164,609 
     198,235 
13.1
67.9
210.5
282.1
258.9
September
13,547 
29,802 
111,938        122,140 
35.3
40.5
152.2
181.0
October
22,771 
42,026 
109,199       135,907 
59.3
54.9
136.7
185.6
November
44,294 
59,759 
151,496       184,158 
115.4
81.0
205.3
272.9
December
89,506 
91,961
210,352 
      248,592 
233.3
127.4
269.3
362.1
Total
194,495
719,978
1,487,303
2,053,465
  1,566,523 
506.8
1,136.3
2,068.0
3,168.6
2,290.0
Source : Sri Lanka Tourism Development Authority
(a)  Provisional
(b) Rivised

BEFPR 2026 · file page 73 printed page 59

Budget, Economic and Fiscal Position Report - 2026	
59   
3.3 Monetary Sector Developments
In January 2025, the CBSL decided to 
maintain the Overnight Policy Rate (OPR) at 
8.00 percent, where it had remained since 
November 2024. In May 2025, the OPR 
was reduced by 25 bps to 7.75 percent, 
thus easing monetary policy further. 
Accordingly, the Standing Deposit Facility 
Rate (SDFR) and the  Standing Lending 
Facility Rate (SLFR), which are linked to 
the OPR with pre-determined margins of ± 
50bps, were reduced to 7.25 percent and 
8.25 percent, respectively. As a result, most 
market interest rates declined including 
short-term rates, lending rates such as the 
Average Weighted Prime Lending Rate 
(AWPR) and the Average Weighted New 
SME Rate (AWNSR), and other key market 
deposit and lending rates. Treasury bill 
yields across all maturities in the primary 
auctions declined by 90-100 bps during 
January-July 2025, and longer-term yields 
also declined in both the primary and 
secondary markets. However, a slight 
increasing trend in yields was observed 
since mid-June 2025. The Statutory Reserve 
Ratio (SRR) has remained unchanged 
at 2.00 percent this year, having no 
direct impact on liquidity, with monetary 
conditions primarily influenced by policy 
rate changes and market-based measures.
0
2
4
6
8
40
44
48
52
56
2017 Q1
2017 Q3
2018 Q1
2018 Q3
2019 Q1
2019 Q3
2020 Q1
2020 Q3
2021 Q1
2021 Q3
2022 Q1
2022 Q3
2023 Q1
2023 Q3
2024 Q1
2024 Q3
2025 Q1
Unemployment Rate (%)
Labour Force Participation Rate( %)
FIGURE 3.7 : Labor Force Participation Rate and    
Unemployment Rate
Labour Force Participation Rate %
Unemployment Rate %
FIGURE  3.7 : Labour Force Participation Rate 
and Unemployment Rate
TABLE 3.4  : Sectoral Distribution of GDP Growth (%)
Sector
2020
2021
2022
2023(b) 2024(b)
First Half
2024(b)
2025(a)
Agriculture
-0.9
1.0
-4.1
1.6
1.2
1.8
0.6
Growing of Tea
-6.5
9.8
-15.7
-1.5
1.7
-6.4
5.9
Growing of Rice
7.7
-11.8
-11.8
17.1
3.1
5.5
2.4
Growing of Rubber
0.2
9.9
-9.8
-7.7
2.2
-3.6
-17.1
Growing of Cereal
59.8
2.8
-24.8
2.5
10.9
17.1
5.5
Growing of  Vegetables
8.9
-1.7
-5.5
2.9
2.8
-0.1
-0.8
Animal Production
-3.7
8.2
-11.4
0.3
14.1
9.2
16.3
Forestry and Logging
-1.3
4.1
14.8
-7.3
-2.1
-0.8
6.8
Fishing
-17.0
1.5
-10.5
3.0
1.9
5.6
5.1
Industry
-5.3
5.7
-16.0
-9.2
11.0
10.5
7.9
Minning and Quarring
-10.9
1.4
-31.0
-22.3
19.4
14.2
14.5
Manufacturing Activities
-2.6
-46.2
-12.2
-3.2
7.6
8.8
7.0
Other Industries
-1.3
2.2
-4.3
-3.0
5.9
11.6
4.8
Construction
-9.4
4.4
-20.9
-20.8
19.4
13.7
9.6
Services
-1.9
3.4
-2.6
-0.2
2.4
2.3
3.3
Wholesale and Retail Trade
0.9
1.5
0.0
0.1
1.3
1.1
1.5
Transportation and Storage
-6.1
0.9
3.0
4.3
2.9
3.3
3.2
Accomodation and Food Service 
Activities
-40.8
1.7
27.0
26.0
31.4
34.4
12.7
Information and Communication
15.0
11.0
6.5
-2.2
4.2
4.0
3.0
Financial and Insurance Activities
9.2
7.0
-11.1
-10.3
-1.2
-1.7
13.5
Real Estate Activities
-1.0
4.4
-12.1
-6.0
4.2
4.4
3.2
Professional Services
-3.3
4.9
-17.7
2.4
3.5
3.9
2.7
Education, Human Health and Social 
Work Activities
2.5
3.7
-2.0
0.7
1.0
0.8
1.4
Public Administration and Defence
1.7
0.9
1.2
-1.7
-2.9
-3.7
-2.5
Other Services (Excluding Own-services)
-6.6
0.9
0.3
0.3
1.5
1.1
0.9
GDP
-4.6
4.2
-7.3
-2.3
5.0
4.6
4.8
Source : Department of Census and Statistics
(a) Provisional
(b) Revised
Unemployment Rate (%)
Source : Department of Census and Statistics

BEFPR 2026 · file page 74 printed page 60

60                                                                      Budget, Economic and Fiscal Position Report - 2026
With 
monetary 
policy 
easing 
and 
improvements 
in 
liquidity 
conditions, 
Broad Money Supply (M2b) increased 
to Rs. 15,175.8 billion at the end of June 
2025, from Rs. 14,439.1 billion at the end of 
January 2025, supported by a notable rise 
in private sector credit and an expansion 
of net foreign assets. Credit flows to the 
private sector increased to Rs. 8,854.6 
billion at the end of June 2025, from 
Rs. 8,149.8 billion at the end of January 
2025. Reflecting improved external sector 
performance, Net Foreign Assets increased 
to Rs. 889.6 billion at the end of June 2025, 
from Rs. 747.4 billion at the end of January 
2025.
an inflation rate of 1.2 percent. The deflation 
was mainly due to supply-side factors, 
especially several rounds of downward 
revisions to electricity tariffs and fuel 
and LP gas prices, domestic supply-side 
improvements, and recovery in global 
supply chains. However, the deflationary 
trend began easing from March 2025, 
mainly due to the statistical base effect, 
with additional contribution from the 
upward revision to electricity tariffs in June 
2025, highlighting the supply-driven nature 
of the deflationary episode.
Meanwhile, core inflation, which reflects 
underlying inflation trends in the economy 
by excluding volatile items such as food, 
energy, and transport, as measured by 
the Y-o-Y change in the CCPI (2021=100), 
remained positive throughout the first nine 
months of 2025. It increased to 2.2 percent 
in October 2025 from 1.2 percent recorded 
in January 2025. This relatively stable core 
inflation suggests that the deflation was 
not demand-driven, while the trend in core 
inflation reflects the second-round effects 
of revisions to energy prices.
Headline inflation, as measured by the  Y-o-Y 
change in the National Consumer Price 
Index (NCPI, 2021=100), which also entered 
the negative territory in September 2024 
(-0.2 percent), recorded its lowest point of 
-4.0 percent in January 2025. It returned to 
positive territory in May 2025, recording 
0.6 percent, and gradually increased to 
2.1 percent in September 2025. This early 
turnaround of the NCPI-based headline 
inflation reflects differences in consumption 
basket composition: the CCPI basket has 
a higher share of non-food items, whereas 
the NCPI basket places relatively greater 
weight on food. Similarly, core inflation, 
as measured by the NCPI (2021=100), 
entered negative territory in January 
2025, recording -0.2 percent, returned to 
positive territory in May 2025, recording 
0.3 percent, and gradually increased to 2.1 
percent in September 2025. 
While the deflation Sri Lanka experienced for 
several months provided some temporary 
relief 
to 
households 
and 
businesses 
recovering from prior inflationary shocks, 
Inflation
The headline inflation, as measured by 
the year-on-year (Y-O-Y) change of the 
Colombo Consumer Price Index (CCPI, 
2021=100), increased to 2.1 percent in 
October 2025 from -4.0 percent recorded 
in January 2025. After entering negative 
territory in September 2024 (-0.5 percent), 
inflation reached its lowest point of -4.2 
percent in February 2025 and returned to 
positive territory in August 2025 recording 
Source : Central Bank of Sri Lanka
Source : Central Bank of Sri Lanka
4
12
20
28
36
2021 Jan
2021 Mar
2021 May
2021 Jul
2021 Sep
2021 Nov
2022 Jan
2022 Mar
2022 May
2022 Jul
2022 Sep
2022 Nov
2023 Jan
2023 Mar
2023 May
2023 Jul
2023 Sep
2023 Nov
2024 Jan
2024 Mar
2024 May
2024 Jul
2024 Sep
2024 Nov
2025 Jan
2025 Mar
2025 May
2025 Jul
%
FIGURE 3.8  : Yield Rates, Monetary Aggregates, Money 
Supply and Private Sector Credit Growth
Treasury Bill Yield 91 days
Monthly AWPR
 Monthly  AWDR

BEFPR 2026 · file page 75 printed page 61

Budget, Economic and Fiscal Position Report - 2026	
61   
the return of CCPI-based headline inflation 
into positive territory reduces the risk of 
deflationary expectations, which could 
delay spending and investment. This 
turnaround in August 2025, reflects that the 
economy has now absorbed the supply-
side shocks. With the stabilization of energy 
and transport prices and the gradual 
improvement in demand conditions due 
to the ongoing accommodative monetary 
policy stance, the Central Bank of Sri Lanka 
expects inflation to remain positive for the 
remainder of 2025, gradually approaching 
the target of 5 percent.
Source : Department of Census And Statistics
(2023 Jan Base Year 2013=100, from Feb 2023 base Year 2021=100)
-10
0
10
20
30
40
50
60
70
2023 Jan
Mar
May
Jul
Sep
Nov
2024 Jan
Mar
May
Jul
Sep
Nov
2025 Jan
Mar
May
Jul
%
Headline Inflation (CCPI)
Food Inflation (CCPI)
Core Inflation (CCPI)
TABLE 3.5 : Consumer Price Inflation  (Base : 2021 = 100) 
Month
2024 (base year 2021=100)
2025 (base year 2021=100)
Headline Inflation 
(YoY)
Core Inflation 
(YoY)
Headline Inflation 
(YoY)
Core Inflation 
(YoY)
CCPI
NCPI
CCPI
NCPI
CCPI
NCPI
CCPI
NCPI
January
6.4
6.5
2.2
2.2
-4.0
-4.0
1.2
-0.2
February
5.9
5.1
2.8
2.7
-4.2
-3.9
0.7
-0.6
March
0.9
2.5
3.1
3.4
-2.6
-1.9
0.7
-0.6
April
1.5
2.7
3.4
3.0
-2.0
-0.8
0.8
-0.1
May
0.9
1.6
3.5
3.1
-0.7
0.6
1.2
0.3
June
1.7
2.4
4.4
3.9
-0.6
0.3
1.5
0.6
July
2.4
2.5
4.4
3.0
-0.3
0.7
1.6
0.9
August
0.5
1.1
3.6
2.3
1.2
1.5
2.0
1.5
September
-0.5
-0.2
3.3
1.9
October
-0.8
-0.7
3.0
1.7
November
-2.1
-1.7
2.7
1.5
December
-1.7
-2.0
2.7
1.3
Source : Department of Census and Statistics
FIGURE 3.9 : Movements in Headline, Core and Food Inflation

BEFPR 2026 · file page 76 printed page 62

62                                                                      Budget, Economic and Fiscal Position Report - 2026
3.4 Stock Market
Sri 
Lanka's 
stock 
market 
witnessed 
significant progress during the first eight 
months of 2025. The All-Share Price Index 
(ASPI, 1985 = 100), which measures the 
movement of share prices of all listed 
companies, increased significantly by 93.2 
percent to 20,997 points as at end-August 
2025, compared to 10,869 points as at end-
August 2024. The Standard and Poor’s Sri 
Lanka 20 (S&P SL20, 2004 = 1,000) index, 
which reflects the performance of 20 
leading publicly traded companies listed 
on the Colombo Stock Exchange, also 
increased significantly by 98.7 percent to 
6,077 points as at end-August 2025, from 
3,059 points as at end-August 2024. 
This upward trend was mainly driven by 
the increased participation from domestic 
investors, supported by reforms introduced 
by the Government aimed at improving 
the business environment and boosting 
investor confidence, stronger corporate 
performance, a positive economic outlook, 
and eased monetary conditions.
Market capitalization, which represents 
the total value of all listed companies on 
the Colombo Stock Exchange increased 
by 71.8 percent to Rs. 7,425 billion as at 
end-August 2025, compared to Rs. 4,321 
billion recorded at end-August 2024. This 
growth in market capitalization reflects the 
expanding value of listed companies and the 
increasing attractiveness of the Sri Lankan 
stock market to investors. Moreover, the 
CSE recorded a remarkable increase in the 
daily turnover by 217.7 percent to Rs. 4,841 
million as at end-August 2025, compared 
TABLE 3.6 : Movements in Capital Market
Indicators
2019
2020
2021
2022
2023
2024
End Aug
2024
2025(a)
All Share Price Index (1985 = 100)
6,129
6,774
12,226
8,490
10,654
15,945
10,869
20,997
S&P SL 20 Index
2,937
2,638
4,233
2,636
3,068
4,862
3,059
6,077
Market Capitalization (Rs. Billion)
2,851
2,961
5,489
3,847
4,249
5,696
4,321
7,425
No. of Listed Companies in Trading
289
283
296
290
290
284
286
286
Annual Average Turnover (Rs.Billion)
171
397
1173
687          411 
538
242
755
Foreign Sales (Rs. Million)
68,272
104,165
86,689
36,863
37,088
52,441
41,736
58,816
Foreign Purchases (Rs. Million)
56,537
52,889
39,410
67,488
41,451
42,524
35,926
36,527
Net Purchases (Rs. Million)
-11,735
-51,276
-47,279
30,625
4,363
-9,918
-5,809
-22,289
Sources : Colombo Stock Exchange and Central Bank of Sri Lanka
(a) Provisional
to Rs. 1,524 million recorded at end-August 
2024. This reflects an exceptional surge 
in trading activity on the exchange, a 
substantial expansion of market liquidity, 
and enhancement in investor confidence 
and participation.
3.5 External Sector Developments
Sri Lanka’s external sector demonstrated 
improved performance in the first eight 
months of 2025, benefitting from increased 
earnings from exports and higher inflows 
from workers’ remittances and earnings 
from tourism. Export earnings increased 
by 6.7 percent to USD 9,076.6 million while 
expenditure on imports increased by 10.5 
percent to USD 13,340.9 million, which 
in turn widened the trade deficit to USD 
4,264.2 million in the first eight months of 
2025, from USD 3,566.2 million in the same 
period of 2024. Earnings from tourism 
increased by 5.7 percent to USD 2,290.0 
million in the first eight months of 2025 
from USD 2,167.0 million in the same period 
of 2024 owing to an increase in tourist 
arrivals. Meanwhile, workers’ remittances 
increased by 19.3 percent to USD 5,116.0 
million in the first eight months of 2025 
from USD 4,288.2 million in the same 
period of 2024. 
The overall Balance of Payments (BoP) 
recorded a surplus of USD 522.5 million 
during the first half of 2025 compared to 
the surplus of USD 1,761.1 million in the 
same period of 2024. The Colombo Stock 
Exchange (CSE) recorded a net outflow of 
USD 69.1 million in the first eight months 
of 2025, compared to a net inflow of USD 
43.6 million in the same period of 2024. Net

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63   
flows to the government securities market 
were recorded as an inflow of USD 140.2 
million in the first eight months of 2025, 
compared to a net outflow of USD 251.4 
million in the same period of 2024. Gross 
Official Reserves (GOR) stood at USD 6.2 
billion by the end of August 2025, including 
the SWAP facility from the People’s Bank 
of China. Meanwhile, the Sri Lankan rupee 
appreciated by 3.3 percent against the 
USD as of end-August 2025.
Exports 
Earnings from exports increased by 6.7 
percent to USD 9,076.6 million in the first 
eight months of 2025, compared to USD 
8,506.3 million in the same period of 2024, 
mainly due to the increase in earnings from 
industrial and agricultural exports with 
the economic revival. Industrial export 
earnings contributed 77.3 percent of the 
total export earnings, while agricultural 
and mineral export earnings accounted 
for 22.4 percent and 0.2 percent of total 
export earnings, respectively. 
Earnings from industrial exports increased 
by 5.2 percent to USD 7,015.4 million in 
the first eight months of 2025, from USD 
6,665.8 million in the same period of 2024 
mainly due to increased export earnings 
from textiles and garments and food, 
beverages, and tobacco products. Export 
earnings from textiles and garments 
increased by 6.9 percent to USD 3,595.3 
million in the first eight months of 2025, 
from USD 3,364.8 million in the same 
period of 2024. Export earnings from food, 
beverages and tobacco products increased 
by 35.0 percent to USD 577.3 million while 
export earnings decreased from petroleum 
products by 7.8 percent to USD 654.7 
million and from rubber products by 6.7 
percent to USD 618.6 million in the first 
eight months of 2025. 
Source : Central Bank of Sri Lanka
Source : Central Bank of Sri Lanka
 (10,000)
 (5,000)
 -
 5,000
 10,000
 15,000
 20,000
 25,000
2019
2020
2021
2022
2023
2024
2024 Jan-Aug
2025 Jan-Aug
USD Million 
Exports
Imports
Trade Balance
100
150
200
250
300
350
400
2012 Jan
May
Sept
2013 Jan
May
Sept
2014 Jan
May
Sept
2015 Jan
May
Sept
2016 Jan
May
Sept
2017 Jan
May
Sept
2018 Jan
May
Sept
2019 jan
May
Sep
2020 Jan
May
Sep
2021 Jan
May
Sep
2022 Jan
May
Sep
2023 Jan
May
Sep
2024 Jan
May
Sep
2025 Jan
May
Sep
Rs./USD
FIGURE 3.10 : Trade Balance and Exchange Rate Movements

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64                                                                      Budget, Economic and Fiscal Position Report - 2026
Earnings 
from 
agricultural 
exports 
increased 
by 
12.5 
percent 
to 
USD 
2,030.2 million in the first eight months 
of 2025, from USD 1,804.0 million in the 
same period of 2024, with increased 
earnings from tea, coconut, spices, minor 
agricultural products, vegetables, rubber, 
and unmanufactured tobacco. Earnings 
from tea exports increased by 8.9 percent 
to USD 1,026.0 million in the first eight 
months of 2025 from USD 942.3 million in 
the same period of 2024. In addition, an 
increase in export earnings was recorded 
from coconut by 35.0 percent to USD 367.5 
million, spices by 4.8 percent to USD 282.6 
million, and minor agricultural products by 
26.5 percent to USD 132.8 million, while 
export earnings declined from seafood by 
1.6 percent to USD 161.9 million in the first 
eight months of 2025. Meanwhile, mineral 
export earnings dropped by 23.8 percent 
to USD 14.3 million in the first eight months 
of 2025 from USD 18.8 million in the same 
period of 2024.
Imports 
Expenditure on imports increased by 10.5 
percent to USD 13,340.9 million in the first 
eight months of 2025 compared to USD 
12,072.5 million in the same period of 2024 
due to the increase in import expenditure 
on consumer and investment goods driven 
by increased demand, with the revival of 
economic activities, removal of import 
restrictions, and also with the impact 
of high commodity prices of the global 
markets. Import expenditure on consumer, 
intermediate and investment goods of 
the total import expenditure accounted 
for 24.7 percent, 55.7 percent, and 19.5 
percent, respectively. 
Import expenditure on consumer goods 
increased notably by 51.4 percent to USD 
3,294.7 million in the first eight months of 
2025, compared to USD 2,176.3 million in 
the same period of 2024, due to increased 
import expenditure on food and beverages 
and nonfood consumer goods. Import 
expenditure on food and beverages 
increased by 16.9 percent to USD 1,419.6 
million in the first eight months of 2025, 
from USD 1,214.1 million in the same 
period of 2024, with the increased import 
expenditure recorded mainly from dairy 
products and oils and fats. Expenditure 
on non-food consumer goods imports 
increased notably by 94.9 percent to USD 
1,875.0 million from USD 962.2 million due 
to the increase in import expenditure 
mainly on personal vehicles, medical and 
pharmaceuticals, clothing and accessories, 
telecommunication devices, and home 
appliances. 
Import 
expenditure 
on 
intermediate 
goods decreased by 4.0 percent to USD 
7,437.4 million in the first eight months 
of 2025 from USD 7,750.0 million in the 
same period of 2024 due to the decline 
in expenditure mainly on fuel and textiles 
and textile articles. Import expenditure 
on fuel declined by 13.0 percent to USD 
2,520.6 million in the first eight months of 
2025, with a decline in import expenditure 
on refined petroleum by 14.4 percent 
to USD 1,846.2 million, crude oil by 5.4 
percent to USD 539.3 million and coal by 
20.7 percent to USD 135.2 million. Import 
expenditure on textiles and textile articles 
decreased by 2.5 percent to USD 1,793.5 
million in the first eight months of 2025, 
from USD 1,839.3 million in the same period 
of 2024. Import expenditure on investment 
goods increased by 21.3 percent to USD 
2,597.2 million in the first eight months 
of 2025, from USD 2,140.3 million in the 
same period of 2024. This was mainly due 
to the increase in import expenditure on 
machinery and equipment by 15.3 percent 
to USD 1,658.4 million, building materials 
by 7.9 percent to USD 649.6 million, and 
transport equipment by 192.4 percent to 
USD 286.7 million due to the improvement 
in investment activities, with the revival of 
the economy.
Source : Central Bank of Sri Lanka
 -
 2,000
 4,000
 6,000
 8,000
 10,000
 12,000
 14,000
2019
2020
2021
2022
2023
2024
2024 Jan-Aug
2025 Jan-Aug
USD Million
Agriculture
Industrial
Mineral
FIGURE 3.11 : Composition of Exports

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Budget, Economic and Fiscal Position Report - 2026	
65   
Tourism and Workers’ Remittances 
Earnings from tourism increased by 5.7 
percent to USD 2,290.0 million in the first 
eight months of 2025, compared to USD 
2,167.0 million in the same period of 2024. 
This growth was supported by a strong 
and diversified recovery in the tourism 
sector, driven by Government initiatives 
such as visa fee waivers for selected 
countries, targeted international marketing 
campaigns and improved air connectivity. 
Accordingly, tourist arrivals increased by 
Source : Central Bank of Sri Lanka
 -
 5,000
 10,000
 15,000
 20,000
 25,000
2019
2020
2021
2022
2023
2024
2024 Jan-Aug
2025 Jan-Aug
USD Million
FIGURE 3.12 : Composition of Imports
Consumer Goods
Intermediate Goods
Investment Goods
TABLE 3.7 : External Trade
USD Mn. 
Category
2022
2023
2024(b)
Jan-Aug
2024(b)
2025(a)
Exports
        13,106 
11,911        12,772 
8,506
9,077
Agricultural Exports
         2,568 
2,567 
2,775         1,539        2,030 
Tea
          1,259 
1,310 
1,436            818         1,026 
Other Agricultural Products
         1,309 
1,257 
1,339            722         1,004 
Industrial Exports
       10,465 
9,278          9,947 
5,805
7,015
Textile and Garments
         5,952 
4,879          5,061 
2,920
3,595
Food, Beverages and Tobacco
            520 
539 
652 
376
577
Rubber Products
            977 
902             976 
588
619
Machinery and Mechanical Appliances
            581 
598 
486 
293
313
Petroleum Products
            568 
539          1,064 
616
655
Other Industrial Exports
         1,868 
1,820           1,710 
1,012
1,256
Mineral Exports
             50 
39              25 
16
14
Unclassified 
             23 
28              26 
16
17
Imports
        18,291 
16,811 
18,841
12,073
13,341
Consumer Goods
         2,813 
3,044 
3,466
2,176
3,295
Food and Beverages
         1,608 
1,693 
1,914
1,214
1,420
Other Consumer Goods
         1,205 
1,351 
1,551 
962
1,875
Intermediate Goods
       12,439 
11,007 
11,915
7,750
7,437
Petroleum
         4,897 
4,703 
4,354
2,897
2,521
Textiles and  Garments
         3,065 
2,371 
2,847
1,839
1,794
Wheat and Maize
            303 
338 
383
205
205
Other        
          4,174 
3,595 
4,331 
2,810
2,918
Investment Goods
         3,030 
2,745 
3,448
2,140
2,597
Machinery and  Equipment
          1,969 
1,868 
2,363
1,439
1,658
Building Materials
            926 
775 
927
602
650
Transport Equipments
            132 
99 
57
98
287
Other
               3 
3                3 
2
3
Unclassified 
               9 
28               13 
6
12
Trade Deficit
-5,185
-4,900
-6,069
-3,566
-4,264
Source : Central Bank of Sri Lanka
(a) Provisional
(b) Revised
FIGURE 3.12 : Composition of Impots

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66                                                                      Budget, Economic and Fiscal Position Report - 2026
15.0 percent to 1,566,523 persons in the 
first eight months of 2025, from 1,362,668 
persons in the same period of 2024. The 
highest tourist arrivals were recorded 
from India, the United Kingdom, Russia, 
Germany, China, France, and Australia. 
Meanwhile, workers’ remittances grew by 
19.3 percent to USD 5,116.0 million in the 
first eight months of 2025 compared to 
USD 4,288.2 million in the same period of 
2024  due to the receipt of remittances 
through 
formal 
channels, 
with 
the 
government’s policy measures to promote 
official remittance channels.  
3.6 World Economic Outlook 
The 
global 
economy 
is 
gradually 
stabilizing after the disruptions caused 
by the   COVID-19 pandemic, the Ukraine-
Russia conflict, policy uncertainty and 
the cost of living crisis, yet challenges 
continue 
to 
shape 
an 
uneven 
path 
forward. With increased trade tension, 
climate change, and heightened policy 
uncertainty contributing to a deterioration 
in the world’s economies across most 
countries. However, the negative impact 
was minimized due to quick private 
sector adjustments and open global 
trade. According to the October Global 
Economic Outlook, issued by International 
Monitory Fund  global real GDP is expected 
to stabilize 3.2, 3.1 in 2025 and 2026 
respectively. Global inflation is projected 
to be 4.2% in 2025 and 3.7% in 2026, with 
notable variation across countries.  
Global financial conditions have tightened 
on average in 2025 compared to last year, 
driven by market volatility and reduced 
risk appetite amid elevated trade policy 
uncertainty. 
However, 
most 
equity 
markets gains driven by a surge in Artificial 
Intelligence stocks. Emerging Markets and 
Developed Economies (EMDEs) financial 
conditions were tightened following the 
USA tariff announcements with outflows 
from equity, bonds, and other financial 
assets. While sovereign spread rose, 
but remained manageable, currencies 
generally appreciated against US Dollar. 
Monetary policy remained cautious in 
EMDEs, balancing inflation, capital flow 
risk, and high debt burden amid global 
uncertainties.
Global Trade and Commodity Markets
With the United States imposing tariffs on 
a wide range of countries, trade shocks 
were witnessed on advanced, emerging, 
and low-income economies. These tariffs 
together with the Russian-Ukraine war 
disrupted global supply chains and placed 
significant pressure on trade flows.
Commodity prices have eased in early 
2025, due to slower growth, trade 
barriers, and policy uncertainty. Fuel prices 
are expected to decline by around 7.9 
percent in 2025 and 3.7 percent in 2026, 
respectively, while metal prices including 
gold are rose by 12.8 percent between 
March and August 2025.
Regional Developments
Growth forecast for advanced economies 
in 2025, has been downgraded, to 1.6 
percent primarily due to rising trade barriers 
together with policy uncertainty, financial 
market uncertainty, and weaker investor 
confidence. The U.S. economy is projected 
to slow sharply to 2.0 percent in 2025, 
following accelerated import demand, 
weaker consumption, and a weakening 
labor market. Euro region growth is set 
to 1.2 percent in 2025, 1.1 percent in 2026, 
mainly owing to tariffs, policy uncertainty, 
weaker external demand on trade, and 
investment. EMDEs growth is projected 
to 4.2 percent in 2025 and 4.0 percent in 
2026. The growth is broad-based, affecting 
nearly 60 percent of EMDEs, and this 
reflects trade and financial vulnerabilities, 
high debt levels, limited capacity to absorb 
internal and external shocks. However, this 
growth is stronger than expected, driven 
by early gains in international trade and 
solid domestic consumption, boosted 
by fiscal expansion in 2025, despite the 
negative effects of rising uncertainty and 
tariffs. Growth in low-income countries is 
forecasted to 4.4 percent in 2025, rising 
to 5.0 percent in 2026-2027, but remains 
highly uncertain due to the ongoing 
trade war, high debt levels, and policy 
uncertainty.

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67   
Global Economic Risks
Downside risk continues to dominate 
the outlook, with elevated trade policy 
uncertainty representing the largest threat 
to global trade, investments, and growth.  
Trade 
tensions, 
financial 
market 
deleveraging, and capital outflows from 
vulnerable EMDEs could weaken demand, 
investment, and employment, particularly 
in export-intensive sectors. Geographical 
conflicts and extreme weather events 
add further downside pressures. On the 
upside, global growth could be stronger if 
trade negotiations lead to tariff reductions, 
technology-led investment increases, or 
additional fiscal support, though these 
could also raise inflation and fiscal risks.
Impact 
of 
Global 
Outlook 
on 
the 
Sri Lankan Economy
Sri Lanka could achieve GDP growth of 
around 5.0 percent despite prevailing 
global vulnerabilities. In August 2025, U.S 
tariffs on Sri Lankan exports were reduced 
to 20 percent from earlier rates 44 percent 
and 30 percent. Despite the cut, the tariff 
remains high and continues to pressure 
key sectors such as apparel, as the U.S. 
is this industry’s main market. This will 
reduce export earnings, threaten jobs, and 
slow GDP growth.  With the upgrade of 
Sri Lanka’s sovereign rating from default 
to CCC+, the country has regained access 
to global markets, which is expected 
to ease external financing pressures, 
investor 
confidence, 
and 
economic 
stability.  Although Sri Lanka experienced 
disinflation up to July 2025, global risks 
such as trade policy uncertainty, financial 
market volatility, and geopolitical conflicts 
continue to pose challenges that could 
push inflation higher in the future. 
TABLE 3.8 : Key Indicators of World Economy - 2025 (Projection)
Country
GDP Growth 
(Annual 
percent 
change)
Inflation 
(Percent)
Unemployment 
(Percent)
Fiscal Deficit 
(Percent of 
GDP)
Gross Debt 
(Percent of 
GDP)
Argentina
4.5
41.3
7.5
0.4
78.8
Australia
1.8
2.6
4.2
-2.7
51.0
Brazil
2.4
5.2
7.1
-8.4
91.4
Canada
1.2
2.0
6.9
-2.2
113.9
Chile
2.5
4.3
8.6
-2.1
42.7
China
4.8
0.0
5.1
-8.6
96.3
France
0.7
1.1
7.6
-5.4
116.5
Germany
0.2
2.1
3.7
-2.5
64.4
Greece
2.0
3.1
9.0
0.0
146.7
India
6.6
2.8
4.9
-7.1
81.4
Indonesia
4.9
1.8
5.0
-2.8
40.8
Italy
0.5
1.7
6.7
-3.3
136.8
Japan
1.1
3.3
2.6
-1.3
229.6
Korea
0.9
2.0
3.0
-1.5
53.4
Malaysia
4.5
1.6
3.0
-3.6
70.4
Mexico
1.0
3.9
2.9
-4.3
58.9
Russia
0.6
9.0
2.4
-2.7
23.1
Singapore
2.2
0.9
2.1
3.1
175.6
South Africa
1.1
3.4
 32.7
-6.0
77.3
Spain
2.9
2.4
10.8
-2.7
100.4
Thailand
2.0
0.2
1.0
-2.6
64.9
United Kingdom
1.3
3.4
4.7
-4.3
103.4
United States
2.0
2.7
4.2
-7.4
125.0
Vietnam
6.5
3.4
2.3
-3.3
32.0
Sources : World Economic Outlook, IMF, October 2025, Fiscal Monitor, IMF, October 2024, Ministry of 
Finance and Central Bank of Sri Lanka

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04
Performance of State 
Owned Enterprises

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4.1 Overview
The main 52 State-Owned Enterprises 
(SOEs) reported a total profit of Rs. 307.1 
billion during the first eight months of 2025, 
of which eight SOEs have added Rs. 294.3 
billion in profits to the SOE sector. The 
banking sector performance has improved 
significantly during the first eight months 
of 2025, as witnessed by an improvement 
in profit by Rs.  69.8 billion to Rs. 147.1 
billion by the three largest state-owned 
banks, Bank of Ceylon, People’s Bank, and 
National Savings Bank, compared to the 
same period in 2024.
The SOE sector is currently undergoing 
several 
reforms, 
including 
the 
proposed Public Commercial Enterprises 
Management Act, closure, restructuring 
or merger of several Non-Commercial 
SOEs as per the recommendations of the 
Cabinet-appointed committee to review 
Non-Commercial SOEs, and the approval 
of the Cabinet of Ministers to liquidate 
33 SOEs that are not at a functional 
level. Among them, the proposed Public 
Commercial 
Enterprises 
Management 
Act is expected to manage all public 
commercial 
enterprises 
professionally, 
independently, productively, and  according 
to commercial principles, while being 
subject to the highest standards of 
governance, accountability and scrutiny. 
Further, as per a 2025 Budget proposal, a 
company called “Lanka Metro Transit (Pvt) 
Ltd” was incorporated as a subsidiary of 
the Sri Lanka Transport Board, with the 
objective of operating a metro bus service 
for the mobility needs of the urban and 
suburban commuters. 
The 
Committee 
with 
professionals, 
appointed as per the Cabinet-approved 
State-Owned Banks (SOB) Reform Policy 
submitted their recommendations for all 
SOBs to appoint independent directors, 
subject to fit and propriety clearance 
from the Central Bank of Sri Lanka. In the 
meantime, with the enactment of the Sri 
Lanka Electricity (Amendment) Act, No. 14 
of 2025 in August 2025, four companies 
fully owned by the government were 
incorporated to facilitate the reform 
process of the Ceylon Electricity Board. 
These reforms are expected to improve 
efficiency, transparency, and accountability 
in the power sector. 
The collection of levies and dividends from 
the SOEs decreased to Rs. 14.6 billion in the 
first eight months of 2025, compared to 
Rs. 26.7 billion in the same period of 2024.
4.2 Review of the ten Major State-Owned 
Business Enterprises (SOBEs)
Bank of Ceylon
The asset base of the Bank of Ceylon (BoC) 
increased by 9 percent to Rs. 5,433 billion 
as at end--August 2025, from Rs. 4,985 
billion as at end-2024. During the first eight 
months of 2025, the deposit base of the 
bank increased by 7.7 percent to Rs. 4,535 
billion, compared to Rs. 4,208 billion as at 
end-2024. Loans and advances increased 
marginally by 6.1 percent to Rs. 2,311 billion 
as at end-August 2025, from Rs. 2,178 
billion as at end-2024. Stage III loan ratio of 
the bank has slightly deteriorated to 7.58 
percent as at end-August 2025, compared 
to 7.20 percent as at end-2024. The BoC 
recorded a Profit before Tax (PBT) of Rs. 
78.7 billion in the first eight months of 2025, 
a significant increase compared to Rs. 31.3 
billion PBT reported in the same period of 
2024. This growth was primarily driven by 
the increase in net interest income. 
People’s Bank
People's Bank’s (PB) asset base increased 
by 9 percent to Rs. 3,598 billion as at end-
August 2025, from Rs. 3,298 billion as at 
end-2024. The deposit base of the bank 
increased by 11.1 percent to Rs. 3,173 billion 
as at end-August 2025, compared to Rs. 
2,855 billion as at end-2024. Loans and 
advances increased marginally to Rs. 1,610 
billion as at end-August 2025, from Rs. 1,522 
billion as at end-2024. Stage III loan ratio 
of the bank has improved to 9.3 percent 
as at end-August 2025, compared to 10.3 
percent as at end-2024. PB recorded a 
profit before tax of Rs. 37.8 billion in the 
first eight months of 2025, a significant 
increase of 56.2 percent compared to Rs. 
24.2 billion in the same period of 2024. 
This was mainly due to the substantial 
improvement in net interest income.

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72                                                                      Budget, Economic and Fiscal Position Report - 2026
National Savings Bank 
National Savings Bank’s (NSB) asset base 
recorded a marginal increase to Rs. 1,821 
billion as at end-August 2025, from Rs. 1,752 
billion as at end-2024. The deposit base 
of the bank increased by 1.9 percent to 
Rs. 1,586 billion as at end-August 2025 from 
Rs. 1,556 billion as at end-2024. The loans 
and advances balance decreased by 2.4 
percent to Rs. 519 billion as at end-August 
2025, compared to Rs. 532 billion as at 
end-2024. Stage III loan ratio of the bank has 
improved to 2.82 percent as at end-August 
2025, compared to 5.18 percent as at 
end-2024. NSB recorded a profit before tax 
of Rs. 30.5 billion in the first eight months 
of 2025, compared to Rs. 21.7 billion in the 
same period of 2024, mainly due to the 
significant increase in net interest income. 
Sri Lanka Insurance Corporation Limited
Sri Lanka Insurance Corporation Limited 
(SLIC) reported a total revenue of Rs. 5 
billion for the first eight months of 2025, 
compared to Rs. 3 billion in the same 
period of 2024, primarily driven by higher 
dividend income of Rs. 2.7 billion, up from 
Rs. 0.4 billion in the same period of 2024. 
SLIC recorded a profit before tax of Rs. 4.4 
billion for the first eight months of 2025, 
marking a substantial increase from Rs. 1.8 
billion reported during the same period 
of 2024. Total assets stood at Rs. 125.1 
billion as at end-August 2025, rising from 
Rs. 115.2 billion at the end of 2024, reflecting 
a strengthened financial position.
SLIC’s 
two 
subsidiaries 
in 
insurance 
business reported improved performance 
during the first  eight months of 2025. Sri 
Lanka Insurance Corporation Life Limited 
reported a PBT of Rs. 21.3 billion for the 
first eight months of 2025, compared to 
Rs. 18.3 billion in the same period of 2024, 
demonstrating steady growth in its life 
insurance business. Meanwhile, Sri Lanka 
Insurance Corporation General Limited 
recorded a PBT of Rs. 2.8 billion, up from 
Rs. 2.3 billion during the same period of 
2024, reflecting continued resilience in its 
general insurance operations.
Ceylon Electricity Board 
The revenue from the sale of electricity 
decreased significantly by 32 percent to 
Rs. 271.5 billion in the first eight months of 
2025, compared to Rs. 402.1 billion in the 
same period of 2024, despite the increase 
in demand for electricity by 5 percent 
to 10,647 GWh in the first eight months 
of 2025, against 10,119 GWh in the same 
period of 2024. This is mainly due to the 
reduction of average end-user tariffs, where 
the sales revenue per unit declined to 
Rs. 25.50 per kWh in the first eight months 
of 2025, compared to Rs. 39.74 per kWh in 
the same period of 2024. 
However, the direct generation cost of 
the CEB declined by 7 percent to Rs. 194.2 
billion in the first eight months of 2025, 
compared to Rs. 208 billion in the same 
period of 2024 primarily due to favorable 
weather conditions that reduced reliance 
on thermal generation. Despite the decline 
in generation cost, due to the reduction 
of average end-user tariffs in 2025, CEB 
recorded a gross loss of Rs. 2.7 billion in 
the first eight months of 2025, compared 
to the gross profit of Rs. 116.5 billion in 
the same period of 2024. As such, CEB 
recorded a net loss of Rs. 4.9 billion in the 
first eight months of 2025, against the net 
profit of Rs. 133.7 billion recorded in the 
same period of 2024, which included the 
gain of Rs. 26 billion on the disposal of 
shares of its subsidiary, Lanka Transformers 
Limited.
During the first eight months of 2025, the 
generation mix slightly changed to hydro: 
thermal (coal): NCRE, wind & rooftop: and 
thermal (fuel) at 35:30:24:11 in comparison 
to 31:35:20:14 in the same period of 2024. 
The expansion of hydro and renewable 
energy, particularly rooftop solar, helped 
reduce the generation cost. Accordingly, 
the cost per unit at the selling point 
decreased to Rs. 27.08 per kWh in the 
first eight months of 2025, compared to 
Rs. 30.76 per kWh in the same period of 
2024.
As at end-August 2025, the trade payables 
of CEB recorded as Rs. 36.7 billion, of 
which 48 percent is due to be settled to

BEFPR 2026 · file page 87 printed page 73

Budget, Economic and Fiscal Position Report - 2026	
73   
independent power producers, amounting 
to Rs. 17.7 billion, compared to Rs. 14.1 
billion as at end-2024. 
Three tariff revision proposals for 2025 were 
submitted by the CEB to Public Utilities 
Commission of Sri Lanka, which resulted 
the end-user average tariff reduction of 20 
percent in January, followed by an increase 
of 15 percent in June, and no change in 
October. 
Meantime, amendments were proposed to 
the Sri Lanka Electricity Act, No. 36 of 2024, 
and accordingly, the Sri Lanka Electricity 
(Amendment) Act, No. 14 of 2025, was 
certified on 18 August 2025. Consequently, 
four government-owned companies were 
established for generation, transmission, 
distribution, and the National System 
Operator in line with the provisions of the 
Act.
Ceylon Petroleum Corporation
The 
revenue 
of 
Ceylon 
Petroleum 
Corporation (CPC) declined by 15.1 percent 
to Rs. 595 billion during the first eight 
months of 2025, compared to Rs. 701 billion 
recorded in the same period of 2024. As a 
result of lower revenue, despite a drop in 
cost of sales, CPC’s gross profit decreased 
by 30 percent to Rs. 43.4 billion in the first 
eight months of 2025, compared to Rs. 
62.4 billion in the same period of 2024.
CPC’s net profit also declined by 19 
percent to Rs. 22.1 billion during the first 
eight months of 2025, compared to Rs. 
27.4 billion in the same period of 2024. This 
decrease in profitability was mainly driven 
by the drop in sales revenue, a significant 
decline of 60 percent in other operating 
income to Rs. 0.4 billion from Rs. 1.1 billion, 
and the sharp decline in realized exchange 
rate variation to Rs. 0.09 billion from Rs. 3.3 
billion in the first eight months of 2024. 
CPC’s payables to National Iranian Oil 
Company (NIOC) decreased from USD 
160.9 million as at end-2024 to USD 105.9 
million as at end-September 2025. In 
addition, CPC’s payables to BoC amounted 
to USD 80 million for import and modality 
bills as at end-August 2025.
The total outstanding trade debt of CPC 
increased by 38 percent to Rs. 13.7 billion 
as at end-August 2025, compared to Rs. 
9.9 billion as at end-2024. This increase was 
mainly due to the enhanced credit facilities 
granted to dealers with effect from April 
2025 and the recognition of Monthly Utility 
Fees (MUF) for the years 2024 and 2025, 
following a court decision. Furthermore, 
additional credit facilities extended to the 
West Coast Power Plant also contributed 
to the rise in trade receivables.
SriLankan Airlines Limited 
During the period from April to August 
2025, passenger revenue of SriLankan 
TABLE 4.1 : Composition of Electricity Generation and Capacity
2024 Jan- Aug Generation
2025 Jan -Aug (Provisional) 
Generation
Installed 
Capacity MW
Percentage 
on Total 
Generation 
Net Gen-GWh
Installed 
Capacity 
MW
Percentage 
on Total 
Generation
Net Gen 
-GWh
Hydro
1,413 
31
3,447 
1,533 
35
4,169 
Thermal - CEB Oil 
801 
10
1,129 
801 
7
849 
Thermal - IPP Oil
482 
4
509 
482 
4
491 
Wind - CEB
104 
2
264 
104 
2
258 
Thermal - Coal
900 
35
3,875 
900 
30
3,466 
NCRE & Wind
784 
13
1,423 
841 
13
1,546 
Rooftop Solar
937 
5
523 
1,684 
9
1,027 
Total
5,421
100
11,169
6,345
100
11,805
Source: Ceylon Electricity Board

BEFPR 2026 · file page 88 printed page 74

74                                                                      Budget, Economic and Fiscal Position Report - 2026
Airlines (SLA) grew by 7 percent to Rs. 95.4 
billion, supported by a strong recovery 
in passenger demand, with a load factor 
improvement to 82.6 percent from 76.4 
percent and passenger volumes growth 
by 22 percent. However, cargo revenue 
declined by Rs. 1.8 billion and other 
income fell by Rs. 2.5 billion, resulting in 
limited overall revenue growth. Operating 
expenses increased by 3 percent during the 
period from April to August 2025, mainly 
due to  higher aircraft maintenance,stations, 
and traffic costs, partly offset by reduced 
fuel expenses. The company reported a 
loss of Rs. 4.1 billion from air transportation, 
which converted to a profit of Rs. 4.9 billion 
after accounting for airport services and 
other income, including ground handling 
and training.  However, for the period from 
April to August 2025, SLA recorded a group 
net loss of Rs. 12.6 billion, compared to the 
loss of Rs. 4.2 billion in the same period of 
2024, largely due to significant exchange 
losses of Rs. 8.5 billion and higher finance 
costs, despite the improved net income of 
Rs. 2.6 billion from SriLankan Catering.
As at end-August 2025, total assets 
stood at Rs. 198.6 billion, an increase 
from Rs. 182 billion as at end March-2025, 
reflecting additions to right-of-use assets 
and receivables. The accumulated losses 
widened to Rs. 631.5 billion as at end-
August 2025, continuing to weaken the 
balance sheet. The Cabinet of Ministers 
has approved a restructuring proposal 
addressing 
the 
airline’s 
local 
debt 
obligations, enabling the conversion or 
deferment of selected government and 
state-owned bank loans. This measure is 
expected to ease liquidity pressures and 
improve the airline’s financial stability, while 
broader restructuring efforts continue to 
address its long-term sustainability.
National Water Supply and Drainage Board
The National Water Supply and Drainage 
Board (NWS&DB), as at end-August 2025 
was able to increase the piped-borne water 
and safe drinking water supply coverage 
in the country to 63.7 percent and 99.1 
percent, respectively, compared to 62.4 
percent and 98.1 percent, respectively as 
at end-August 2024. 
During the first eight months of 2025, the 
NWS&DB recorded a revenue of Rs. 56.1 
billion against the revenue of Rs. 57.2 billion 
in the same period of 2024. Meantime, the 
cost of sales during the first eight months 
of 2025, has also declined by 10 percent to 
Rs. 20.4 billion mainly due to the reduction 
in the pumping cost associated with the 
electricity tariff reduction in January 2025. 
Hence, the Board recorded a gross profit of 
Rs. 35.7 billion for the period under review, 
against Rs. 35.8 billion for the same period 
in 2024. Accordingly, the Board recorded a 
net profit of Rs. 25.2 billion against the net 
profit of Rs. 17.6 billion in the same period 
of 2024, due to the notable decline in the 
local interest rates. 
Both the water production and water sales 
for the first eight months of 2025  increased 
by around 2 percent and stood at 568 
million m3 and 429 million m3, respectively, 
compared to the same period of previous 
year. Further, Non-Revenue Water (NRW) 
improved slightly to 24.52 percent in the 
first eight months of 2025, compared to 
24.69 percent in the same period of 2024.
Sri Lanka Ports Authority 
The performance of the Sri Lanka Ports 
Authority (SLPA) for the first eight months 
of 2025, reflects strong operational growth 
and improved profitability compared to the 
same period in 2024. Revenue increased by 
12.4 percent to Rs. 55.3 billion, supported 
by higher port throughput and operational 
efficiency, while direct expenses declined 
by 4.6 percent, resulting in a 28 percent 
rise in gross profit. During the first eight 
months of 2025, other operating income 
rose by 44 percent, reflecting improved 
returns 
from 
port-related 
services. 
Despite a moderate 6 percent increase in 
administrative expenses, operating profit 
grew by 41 percent to Rs. 37.3 billion 
during the period under review, compared 
to the same period in 2024. Favourable 
foreign 
exchange 
movements 
further 
strengthened performance, resulting in a 
48 percent increase in profit before tax to 
Rs. 39.2 billion in the first eight months of 
2025, compared to Rs. 26.4 billion in the 
same period of 2024.

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Budget, Economic and Fiscal Position Report - 2026	
75   
On the financial position, total assets 
increased by 6.6 percent to Rs. 789.8 
billion as at end-August 2025, mainly due 
to ongoing capital investments in port 
infrastructure. The Cabinet of Ministers has 
also approved the establishment of a new 
subsidiary to operate the East Container 
Terminal (ECT), and a substantial portion 
of SLPA’s investment will be transferred to 
this entity once the process is completed. 
Equity 
strengthened 
by 
7.8 
percent 
owing to higher retained earnings. The 
Government has requested a levy of Rs. 10 
billion from SLPA, of which Rs. 2 billion has 
already been remitted to the Consolidated 
Fund. Overall, SLPA remains financially 
sound with strong profitability, growing 
equity, and a healthy balance sheet 
position.
Airport and Aviation Services (Sri Lanka) 
(Private) Ltd
During the first eight months of 2025, 
Airport & Aviation Services (Sri Lanka) 
(Private) Limited (AASL) recorded a total 
revenue of Rs. 35.8 billion, marking a 
25 percent increase compared to Rs. 
28.5 billion in the same period of 2024. 
This growth was primarily driven by a 31 
percent rise in non-aeronautical revenue, 
led by a near-doubling of income from the 
embarkation levy. 
In 
the 
meantime, 
total 
operational 
expenditure 
decreased 
marginally 
to 
Rs. 14.8 billion in the first eight months 
of 2025, from Rs. 15.3 billion in the same 
period of 2024, largely due to a 31 percent 
reduction 
in 
depreciation. 
However, 
finance expenses increased by 45 percent 
to Rs. 1.2 billion during the period under 
review, and the company recorded a 
substantial exchange loss of Rs. 2.5 billion, 
in contrast to a gain of Rs. 876 million in the 
same period of 2024. Nevertheless, profit 
before tax increased to Rs. 21.9 billion, 
a 17 percent year-on-year growth. After 
accounting for a higher tax provision of 
Rs. 5.9 billion, net profit stood at Rs. 16.1 
billion, up from Rs. 14.9 billion in the same 
period of 2024. 
As at end-August 2025, AASL demonstrates 
a strong financial position with total assets 
amounting to Rs. 249 billion, underpinned 
by significant investments in property, 
plant, and equipment, and robust short-
term investments over Rs. 113 billion. The 
company reported a healthy equity of 
Rs. 106.5 billion, primarily driven by retained 
earnings and revaluation reserves. However, 
total borrowings remain substantial at 
Rs. 102 billion as at end-August 2025, 
reflecting heavy infrastructure investments, 
notably in the airport development project. 
TABLE 4.2 : Profit before Tax of 52 State Owned Enterprises
 
Enterprise
2023
Actual
2024
(Provisional)
2025
Jan.- Aug.
(Provisional)
    1  Bank of Ceylon 
40,342
106,904
78,714
2 People’s Bank  
15,345
41,584
37,829
3 National Savings Bank  
4,287
26,431
30,582
4 State Mortgage & Investment Bank   
-1,165
158
364
5 HDFC Bank  
2,650
412
315**
6 Pradeshiya Sanwardena Bank  
1,183
3,210
2,855
7 Employees' Trust Fund Board  
64,959
63,177
38,660***
8 Sri Lanka Insurance Corporation Limited 
10,704
3,546
4,432
9 National Insurance Trust Fund 
13,329
16,793
13,837
10 Sri Lanka Export Credit Insurance Corporation 
1,056
852
472
11 Agriculture and Agrarian Insurance Board 
-3,885
-3,182
574
12 Ceylon Electricity Board 
57,633
144,394
-4,917
13 Ceylon Petroleum Corporation 
120,346
33,265
22,130
14 Sri Lanka Ports Authority 
40,359
46,734
39,174
15 National Water Supply and Drainage Board 
5,235
23,945
25,238
16 Airport and Aviation Services (SL ) (Pvt) Ltd 
33,639
28,671
21,955
Rs.Mn.

BEFPR 2026 · file page 90 printed page 76

76                                                                      Budget, Economic and Fiscal Position Report - 2026
Enterprise
2023
Actual
2024
(Provisional)
2025
Jan.- Aug.
(Provisional)
17 Sri Lankan Airlines Ltd 
3,871
-7,595
-15,205*
18 Sri Lanka Transport Board 
2,189
547
1,873
19 State Engineering Corporation(a) 
-2,709
-1,041
-152
20 Central Engineering Consultancy Bureau 
748
608
200
21 State Development and Construction Corporation 
-2,246
-1,411
-279
22 Milco (Pvt) Ltd 
-470
-43
956
23 National Livestock Development Board(a) 
-136
281
4
24 Sri Lanka State Plantations Corporation  
-93
-69
-72
25 Janatha Estates Development Board(a) 
-156
-223
-68
26 Kurunegala Plantations Ltd  
534
415
552
27 Chilaw Plantations Ltd  
303
219
505
28 Kalubovitiyana Tea Factory Ltd 
69
-11
66*
29 Sri Lanka Cashew Corporation 
-5
14
-2
30 Lanka Mineral Sands Ltd 
4,051
-77
94
31 Lanka Phosphate Ltd 
363
465
230
32 Kahatagaha Graphite Lanka Ltd  
28
24
18*
33 Development Lotteries Board 
3,516
4,197
4,270
34 National Lotteries Board 
845
1,693
1,417
35 State Pharmaceuticals and Manufacturing 
Corporation 
2,173
3,083
2,007
36 Sri Lanka Ayurvedic Drugs  Corporation 
218
183
208
37 State Pharmaceuticals  Corporation 
1,268
2,474
992
38 Sri Jayawardenepura General Hospital  
304
552
771
39 Independent Television Network Ltd 
-205
3
-99
40 Sri Lanka  Rupavahini Corporation 
-360
-247
-224
41 Sri Lanka Broadcasting Corporation 
-528
-158
-65
42 Sri Lanka Handicraft Board 
57
85
44
43 State Timber Corporation 
1,274
825
126
44 STC General Trading Company 
1,501
367
62*
45 Lanka Sathosa Ltd 
-695
-1,097
-332
46 State Printing Corporation 
2,792
284
-164
47 Ceylon Fisheries Corporation(a) 
-47
-20
13
48 Ceylon Fishery Harbour Corporation 
640
-85
-122
49 Ceylon Fertilizer Company Ltd  
61
-476
_****
50 Colombo Commercial Fertilizer Company Ltd 
162
-41
_****
51 Hotel Developers Lanka Ltd 
-784
-268
-279
52 Lanka Sugar Company Ltd  
2,835
-1,945
-2,077
Total
427,385              538,408 
307,482 
Source: SOEs  and Department of Public Enterprises
(a)Provisional
* 2025 April - August
** 30th June 2025
*** 31st July 2025
**** Ceylon Fertilizer Company Ltd and Colombo Commercial Fertilizer Company Ltd was amalgamated 
in 2024 and the newly formed company, State Fertilizer Company has generated a profit of Rs. 337 Mn 
for April to August 2025. 
Rs.Mn.

BEFPR 2026 · file page 91 printed page 77

Budget, Economic and Fiscal Position Report - 2026	
77   
TABLE 4.3 : Levy/ Dividend Income from SOEs
Rs. Mn.
Enterprise
Actuals
Projections
2023
2024
As at 
31.08.2025
2026
2027
Levy 
       60,497 
33,191 
11,466 
83,009 
84,168 
People’s Bank
              - 
-                   - 
12,100 
12,100 
Bank of Ceylon
              - 
-                   - 
18,600 
18,600 
National Savings Bank
              - 
-                   - 
6,650 
6,650 
Regional Development Bank
              - 
-                   - 
600 
600 
Ceylon Petroleum Corporation
5,000 
10,000                   - 
10,700 
10,700 
Telecommunication Regulatory Commission of 
Sri Lanka
23,000 
9,000                   - 
10,000 
10,000 
State Timber Corporation
             641 
- 
447 
100 
100 
State Pharmaceuticals Manufacturing 
Corporation
            300 
300 
282 
400 
450 
National Insurance Trust Fund
2,000 
2,919 
1,486 
4,000 
4,000 
Geological Survey and Mines Bureau
2,000 
1,468 
1,688 
2,150 
2,200 
National Gem and Jewellery Authority
            390 
25 
120 
50 
50 
Board of Investment of Sri Lanka
            533 
928                   - 
1,265 
1,392 
National Lotteries Board
         1,000 
1,060 
350 
1,000 
1,000 
Sri Lanka Standards Institution
              40 
13 
64 
154 
169 
Sri Lanka Export Credit Insurance  Corporation
            620 
300 
25 
60 
60 
Sri Lanka Tourism Promotion Bureau
500 
500                   - 
1,100 
1,210 
Civil Aviation Authority
4,000 
750 
500 
100 
100 
State Pharmaceutical Corporation
              - 
100                   - 
150 
150 
National Transport Medical Institute
            150 
850 
125 
300 
325 
Sri Lanka Bureau of Foreign Employment
         7,000 
- 
5,000 
5,500 
6,050 
National Transport Commission 
            300 
250 
150 
250 
280 
Sri Lanka Tourism Development Authority
              75 
-                   - 
220 
242 
Sri Lanka Land Reclamation and Development 
Corporation
500 
-                   - 
- 
20 
Sri Lanka Ports Authority
         8,066 
607                   - 
5,764 
5,764 
National Medicine Regulatory Authority
            646 
880 
716 
300 
350 
Road Development Authority
              75 
1,749                   - 
- 
- 
Land Reform Commission 
            350 
15                   - 
550 
605 
Condominium Management Authority 
200 
- 
10 
- 
5 
National Institute of Business Management
             115 
85 
30 
30 
30 
Post Graduate Institute of Management
              25 
4 
30 
30 
30 
Other SOEs
          2,971 
1,388 
444 
886 
936 
Dividends 
       15,204 
7,890 
3,172 
14,943 
15,436 
National Savings Bank
              30 
-                   - 
- 
- 
Bank of Ceylon
             173 
-                   - 
- 
- 
People's Bank
            158 
-                   - 
- 
- 
Sri Lanka Insurance Corporation Ltd
         2,272 
1,271                   - 
4,700 
4,700 
Airport and Aviation Services (Sri Lanka)(Pvt) 
Ltd
5,500 
1,286                   - 
5,969 
5,969 
Lanka Mineral Sands Ltd
2,500 
158                   - 
500 
700 
Lanka Phosphate Ltd
            220 
75 
25 
75 
75 
Lanka Leyland Ltd
                6 
-                   - 
7 
8

BEFPR 2026 · file page 92 printed page 78

78                                                                      Budget, Economic and Fiscal Position Report - 2026
Enterprise
Actuals
Projections
2023
2024
As at 
31.08.2025
2026
2027
Rakna Arakshaka Lanka Ltd
             125 
75                   - 
134 
148 
Manthai Salt Ltd. (National Salt Ltd)
            120 
-                   - 
60 
60 
Ceylon Fertilizer Ltd 
              22 
15                   - 
- 
- 
Colombo Commercial Fertilizer Ltd
              60 
30                   - 
- 
- 
Paranthan Chemicals Company Ltd
            305 
131                   - 
60 
60 
STC General Trading Company 
            150 
50                   - 
60 
65 
Sri Lanka Telecom PLC
            223 
- 
227 
227 
227 
De La Rue Lanka (Pvt) Ltd
              - 
1,324 
494 
544 
598 
Lanka Electricity Company Ltd
            697 
436                   - 
400 
450 
Lanka Industrial Estates Ltd
             174 
98                   - 
- 
- 
Ceylon Agro Industries
             167 
202 
131 
- 
- 
Plantation Companies
            554 
559 
134 
400 
570 
Lanka Sugar Company Limited
          1,597 
-                   - 
- 
- 
Lanka Thriposha Ltd
              75 
100 
11 
150 
150 
Other SOEs 
              75 
2,080 
2,150 
1,657 
1,657 
Total 
        75,701 
41,081 
14,639 
97,952 
99,604 
Source: SOEs and Department of Public Enterprises

BEFPR 2026 · file page 93 printed page 79

05
Basis Used for the 
Preparation of 2026 
Budget

BEFPR 2026 · file page 94 printed page 80

No text on this page (image, chart or blank page).

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Budget, Economic and Fiscal Position Report - 2026	
79   
5.1 Overview 
The macroeconomic and fiscal estimates 
in the Budget 2026 are based on a series 
of assumptions, analyses, and judgements 
at the time of preparation of the Budget. 
This section provides key macroeconomic 
indicators considered for the preparation 
of the revenue and expenditure estimates, 
including Gross Domestic Product (GDP), 
inflation, unemployment, and the external 
sector, along with the global and financial 
sector 
developments, 
labour 
market 
developments, and highlights sensitivities 
in the estimates.
5.2 Gross Domestic Product 
Sri Lanka's economy has recovered from 
the crisis, supported by improved political 
and macroeconomic stability, and has 
exhibited broad-based expansion across 
sectors such as Agriculture, Industry 
and Services. The economy grew by 4.8 
percent in the first half of 2025. In 2026, 
the economy is expected to expand, with a 
projected GDP growth rate of 4 - 5 percent 
as per the baseline scenario. Broad-based 
growth is anticipated across all sectors, 
supported by the rebound in domestic 
economic 
activities, 
rising 
external 
demand, improved supply conditions, and 
the development of tourism and other key 
industries.
Government policy on the Agriculture 
sector is to enhance its productivity, 
competitiveness, and resilience which is 
to be an export-driven value-added sector. 
Key measures include the development 
of quality seeds, the efficient use of water 
resources in agriculture, and initiatives to 
bridge the gap between demand and supply 
in the market. In addition, the establishment 
of a comprehensive data and information 
system covering the entire value chain, 
from production to consumption is being 
prioritized. These efforts are expected to 
strengthen agricultural productivity, and 
thereby increasing overall production. The 
Industry sector is projected to expand 
significantly, particularly in construction 
and manufacturing, with an emphasis on 
value-added manufacturing and export 
diversification. 
The Services sector, accounting for the 
largest share of GDP, is expected to expand 
steadily, supported by growth in key 
subsectors such as finance, transport, IT, 
trade, and real estate, alongside increased 
public investment in transport, automation, 
and digitalization. Growth in the services 
sector is expected to strengthen with 
the 
accelerated 
development 
of 
Sri 
Lanka’s digital economy, which serves 
as a key pillar of the country’s overall 
economic 
development 
strategy. 
Increased 
investment 
in 
innovations 
related to artificial intelligence, robotics, 
and other emerging technologies, along 
with the expansion of digital payment 
infrastructure, is anticipated to further 
enhance the sector’s contribution to 
growth. 
Meanwhile, 
the 
Government 
remains focused on maximizing the value 
generated from tourism by improving the 
necessary infrastructure and strengthening 
measures to ensure the safety and 
satisfaction of tourists.
5.3 Consumer Prices 
Sri Lanka returned to positive inflation 
territory 
in 
August 
and 
September 
2025, after recording deflation for seven 
consecutive months since January 2025. The 
recent inflation is driven by price increases 
in food and non-alcoholic beverages, as 
well as revised utility and fuel tariffs. By 
September 2025, food inflation amounted 
to 2.9 percent, whereas non-food inflation 
was 0.7 percent.
It is expected that inflation in Sri Lanka will 
rise gradually toward the 5 percent target 
by mid-2026, driven by improving domestic 
demand, normalization of administered 
prices, and prudent monetary and fiscal 
policies. This outlook assumes stable global 
energy and commodity prices, favorable 
agricultural production, and continued 
exchange rate stability.
5.4 Employment and Unemployment 
The unemployment rate has reduced to 
3.8 percent in the first quarter of 2025, 
compared to 4.5 percent in the same period 
of 2024. Also, labour force participation 
rate has increased to 49.7 percent in the

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80                                                                      Budget, Economic and Fiscal Position Report - 2026
first quarter of 2025, compared to 47.1 
percent in the same period of 2024. 
With the gradual recovery of the economy 
and with the envisaged expansions of 
all three sectors of the economy, the 
unemployment rate is expected to further 
reduce in 2026.
5.5 External Sector 
Sri Lanka’s external sector is anticipated 
to strengthen in 2026, supported by the 
continuation of monthly current account 
surpluses recorded from January to August 
2025, reflecting higher growth in export of 
goods and services during the period. 
The current account recorded an increase 
of 26.1 percent to USD 2,039.5 million in 
the first eight months of 2025, compared 
to USD 1,618.0 million in the same period 
of 2024. Tourism receipts increased by 
5.7 percent to USD 2,290.0 million from 
January to August, 2025, compared to 
USD 2,167.0 million in the same period of 
2024. Workers’ remittances demonstrated 
a robust growth of 19.3 percent, rising to 
USD 5,116.0 million in the first eight months 
of 2025. Meanwhile, net inflows in the 
services sector increased by 2.3 percent 
to USD 2.7 billion for the period from 
January to August 2025. The expansion in 
tourism earnings and workers’ remittances 
observed in the first eight months of 2025, 
is expected to further widen net inflows 
in 2026. Moreover, the country’s foreign 
reserve position is anticipated to improve 
with the expansion of exports of goods 
and services to global markets, in line with 
the implementation of the National Export 
Development Plan (2025–2029) and the 
introduction of a National Tariff Policy aimed 
at establishing a simplified, transparent, and 
predictable tariff framework. The exchange 
rate is also expected to remain broadly 
stable during 2026, reflecting improved 
external balances and strengthened market 
confidence.
5.6 Monetary Aggregates 
The money supply is expected to be 
maintained at an appropriate level. With 
the expected revenue at 15.2 percent of 
GDP in 2026 and the anticipated budget 
deficit at 5.3 percent of GDP, it is expected 
to maintain to gross financing needs of the 
Government at a sustainable level. This will 
create a more favorable environment for 
private sector investment.
5.7 Revenue
The assumptions underlying the revenue 
estimates are detailed in Annex III.
5.8 Expenditure
The basis for the preparation of expenditure 
estimates is as follows: 
•	 Salaries 
and 
Wages: 
Estimates 
are based on the public sector 
workforce 
of 
approximately 
1.3 
million employees. It is assumed 
that the number of public sector 
employees will not be considerably 
increased through new recruitments 
in 
2026. 
Further, 
annual 
salary 
increments have been factored into 
the estimates, along with the wage 
increases proposed in Budget 2025 
for public sector employees.
•	 Pension Payments: The expenditure 
estimates for pensions are based on 
the estimated number of pensioners 
of 745,000 and the increase of 
pension 
payments 
in 
2026 
as 
proposed in Budget 2025.
•	 Interest Payments: Expenditure on 
interest payment for 2026 is expected 
to reduce given the combined effect 
of restructuring of domestic debt and 
potential reduction in policy rates.
•	 Goods and Services: The expenditure 
on goods and services is envisaged 
to increase to Rs. 401.0 billion.
•	 Subsidies to households: Spending on 
social safety nets (SSNs) is expected 
to 
increase, 
reflecting 
higher 
allocations for key programmes such 
as Aswesuma and other targeted 
initiatives supporting the elderly, 
persons 
with 
disabilities, 
and 
chronic kidney patients. In addition, 
funding for other major welfare

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Budget, Economic and Fiscal Position Report - 2026	
81   
programmes, including assistance for 
schoolchildren through the provision 
of uniforms and textbooks, support for 
differently-abled soldiers, nutrition 
programmes for expectant mothers, 
the supply of free medicines, and 
fertilizer subsidies to ensure food 
security, is also expected to continue 
at enhanced levels.
•	 Transfers 
to 
Public 
Institutions 
and Corporations: There will be 
a moderate increase due to the 
restructuring of major State-Owned 
Enterprises (SOEs).
•	 Public Investment: In 2026, public 
investment 
will 
be 
around 
4.0 
percent of GDP, gearing investments 
to priority sectors while reducing 
non-priority 
and 
non-essential 
expenditure.
•	 Public Financial Management Act, 
No. 44 of 2024: The Act came into 
effect on August 8, 2024 and will be 
fully implemented by end December 
2025. The structural, procedural and 
institutional amendments introduced 
under the Act will, inter alia, enhance 
the 
transparency, 
accountability, 
discipline, effectiveness, efficiency, 
and economy in the management 
of 
public 
finances, 
including 
expenditure management.
•	 IT and Digital Solutions: Efforts 
to transform the country into a 
digital 
society, 
along 
with 
the 
introduction of ‘GovPay’ platform for 
the digitalization of all government 
payments, 
will 
enhance 
public 
service delivery as well as operational 
efficiency.
•	 Agency 
Coordination 
and 
Monitoring: Enhanced cooperation 
among public agencies and stronger 
oversight will ensure effectiveness of 
budgetary allocations, while avoiding 
duplication.
•	 Commitment Control Mechanisms: 
The Public Financial Management 
Act, No. 44 of 2024 provides for 
the establishment of an effective 
commitment control system which 
will strengthen fiscal and cash flow 
management.
5.9 Borrowings
The estimates on Government gross 
borrowing requirements are projected to 
Rs. 3,800 billion in 2026. The Government 
budget deficit is expected to widen by 
0.8 percentage points to 5.3 percent in 
2026, compared to the estimated budget 
deficit of 4.5 percent in the revised 
Budget 2025. Further, the Public Debt 
Management Office (PDMO) has been 
established with the key responsibilities 
including the management of Government 
debt, issuance and management of loan 
guarantees, management of on-lending 
operations and recording and reporting 
of public debt. The PDMO will ensure 
implementation of efficient and transparent 
borrowing practices.
5.10 Sensitivities to the Estimates
Fiscal and economic projections could be 
influenced by several risks and challenges, 
including:
Macroeconomic Uncertainty: Economic 
conditions create a major determinant 
of fiscal outcomes; however, they also 
represent a primary source of uncertainty in 
forecasting the fiscal position. Fluctuations 
in global commodity prices, on-going 
US tariff revisions, and heightened geo-
political tensions in the global economy 
coupled with forcast global economic 
growth and domestic economic activity 
may lead to deviations of actual revenue 
and expenditure outcomes from initial 
projections. 
Moreover, 
unforeseen 
expenditure pressures, such as those 
arising from emergency responses or 
social assistance measures necessitated by 
unexpected economic shocks can further 
influence the anticipated fiscal projections 
as 
specified 
in 
the 
Fiscal 
Strategy 
Statement 2026. Variables such as inflation, 
interest rates, and exchange rates directly 
affect the cost of borrowing and the overall 
fiscal position. These variables are also 
vulnerable to sudden and unpredictable 
shifts in economic forces.

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82                                                                      Budget, Economic and Fiscal Position Report - 2026
External shocks: Adjusting to global 
economic 
shocks 
which 
could 
arise 
from geo-political tensions such as the 
ongoing tariff disputes between the 
United States and the rest of the world 
will be challenging. These external shocks 
may impact domestic international trade, 
inflation, and overall economic growth.
Natural disasters and unfavorable weather 
conditions: 
Fiscal 
risks 
from 
natural 
disasters generally stem from the need to 
finance unforeseen expenditures related to 
disaster management, relief and recovery 
operations, 
and 
the 
reconstruction 
or 
rehabilitation 
of 
damaged 
public 
infrastructure. The country is exposed to a 
variety of natural hazards, including floods, 
landslides, cyclones, and droughts, each 
of which may occur within the coming 
year. Such events may adversely affect 
labor productivity and potential economic 
growth, thereby exerting negative pressure 
on the fiscal position of the country.
Administrative and procurement delays: 
Bureaucratic inefficiencies and delays could 
slow down economic progress and fiscal 
operations. It may slow the implementation 
of public investment projects, reducing 
their contribution to economic growth 
and employment. Delays can also increase 
project costs and create inefficiencies 
in public spending. Consequently, these 
factors can put additional pressure on the 
fiscal balance and revenue collection.
Legislative 
delays: 
Delays 
in 
the 
approval of key fiscal-related Acts may 
create uncertainty in the timing and 
implementation of budgetary measures. 
Postponed 
tax 
reforms 
or 
spending 
approvals can lead to revenue shortfalls 
and expenditure overruns. This uncertainty 
can weaken fiscal discipline, increase 
borrowing requirements, and ultimately 
threaten the government’s ability to meet 
its fiscal targets.
State-Owned 
Enterprises 
(SOEs) 
performance: 
SOEs 
are 
subject 
to 
operational risks and broader market 
fluctuations 
that 
may 
affect 
their 
profitability and financial sustainability. 
Weak performance of SOEs, coupled with 
delays in restructuring initiatives, can 
impede economic efficiency and pose 
challenges to achieving fiscal consolidation 
objectives.

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Budget, Economic and Fiscal Position Report - 2026	
83   
 ANNEX I 
The Outstanding List of Treasury Guarantees & Letters of Comfort Issued by the General 
Treasury up to 31.08.2025
S. 
No
Name of the Bank 
or Institution
Name of Institution
 Issued Value Rs.Mn as at 
31.08.2025
Outstanding Value Rs.Mn as 
at 31.08.2025 
1
Asian Development 
Bank
Ceylon Electricity Board 
170,882.27 
201,126.92 
94,776.45 
109,903.31 
Lanka Electricity Company (Pvt) 
Ltd
15,122.33 
4.54 
Reginoal Development Bank
15,122.33 
15,122.33 
2
Asian Infrastructure 
Investment Bank 
(AIIB)
Bank of Ceylon & People's Bank
54,440.37 
54,440.37 
30,244.65        30,244.65 
3
Bank of Ceylon
Building Materials Corporation Ltd
500.00 
428,667.04 
500.00 
259,677.63 
Ceylon Electricity Board 
4,540.00 
1,179.54 
Ceylon Fisheries Corporation
250.00 
158.62 
Ceylon Petroleum Corporation
100,000.00 
59,381.35 
General Sir John Kotelawala 
Defence University
835.00 
19.26 
Janatha Estates Development 
Board
200.00 
72.08 
Lanka Coal Company (Pvt) Ltd
49,500.00 
- 
National School of Business 
Management Limited
8,600.00 
4,880.00 
National Water Supply & 
Drainage Board
65,662.15 
36,292.40 
Northsea Limited
38.63 
37.41 
Road Development Authority
147,102.33 
105,923.53 
Sri Lanka Rupavahini Corporation
93.00 
23.71 
Sri Lankan Airlines Limited
44,656.88 
44,656.88 
State Development and 
Construction Corporation
1,126.81 
990.62 
State Engineering Corporation
2,400.00 
2,399.99 
Mihin Lanka Limited
3,162.23 
3,162.23 
4
China Development 
Bank
National Water Supply & 
Drainage Board
49,906.88 
49,906.88 
60,268.51 
60,268.51 
5
China National 
Chemical 
Engineering No.14 
Constrution Co. Ltd
Ceylon Petroleum Corporation
13,239.60 
13,239.60 
7,158.91 
7,158.91 
6
Commercial Bank
National Water Supply & 
Drainage Board
968.36 
5,724.29 
427.65 
5,183.58 
Road Development Authority
4,755.93 
4,755.93 
7
DB Trustees (Hong 
Kong) Limited
Sri Lankan Airlines Limited
52,928.14 
52,928.14 
52,928.14 
52,928.14 
8
DFCC Bank
National Water Supply & 
Drainage Board
6,026.24 
11,922.75 
3,020.35 
7,612.51 
Road Development Authority
5,896.51 
4,592.16 
9
Exim Bank of India
National Water Supply & 
Drainage Board
77,638.02 
77,638.02 
47,115.12 
47,115.12 
10
Hatton National 
Bank
Airport & Aviation Services (Sri 
Lanka) Limited
4,000.00 
43,630.09 
4,000.00 
30,778.49 
Ceylon Electricity Board 
3,721.35 
- 
National Water Supply & 
Drainage Board
15,775.58 
6,694.49 
Road Development Authority
20,133.15 
20,084.00 
11
Hongkong & 
Shanghai Banking 
Co.Ltd.
Airport & Aviation Services                
(Sri Lanka) Limited
13,349.37 
13,349.37 
8,922.17 
8,922.17 
12
Industrial And 
Commercial Bank of 
China Limited
Ceylon Electricity Board 
12,694.41 
12,694.41 
8,023.91 
8,023.91 
13
ING Bank, NV of 
Netherlands
National Water Supply & 
Drainage Board
29,253.20 
29,253.20 
25,151.18 
25,151.18

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84                                                                      Budget, Economic and Fiscal Position Report - 2026
S. 
No
Name of the Bank 
or Institution
Name of Institution
 Issued Value Rs.Mn as at 
31.08.2025
Outstanding Value Rs.Mn as 
at 31.08.2025 
14
International 
Air Transport 
Association(IATA)
Sri Lankan Airlines Limited
3,508.38 
3,508.38 
3,508.38 
3,508.38 
15
Japan International 
Coorporation 
Agency (JICA)
Airport & Aviation Services (Sri 
Lanka) Limited
153,175.98 
153,175.98 
55,330.55 
55,330.55 
16
National 
Development Bank 
PLC
National Water Supply & 
Drainage Board
21,380.43 
27,679.63 
13,651.70 
19,951.54 
Road Development Authority
6,299.21 
6,299.84 
17
National Savings 
Bank
Ceylon Electricity Board 
5,000.00 
190,272.35 
3,500.00 
162,966.39 
General Sir John Kotelawala 
Defence University
33,896.09 
31,474.94 
National Water Supply & 
Drainage Board
32,710.61 
27,106.37 
Road Development Authority
114,415.66 
99,201.08 
Sri Lanka Land Reclamation & 
Development Corporation
3,500.00 
934.01 
Techno Park Development 
Company Private Limited
750.00 
750.00 
18
People's Bank
Ceylon Electricity Board 
15,333.33 
176,429.93 
8,191.89 
131,798.09 
Ceylon Petroleum Corporation
2,336.40 
1,403.35 
Ceylon Shipping Corporation Ltd
21,749.07 
14,381.33 
Lanka Sathosa Limited
5,241.00 
4,757.27 
National Paper Corporation
140.00 
72.34 
National Water Supply & 
Drainage Board
7,252.88 
3,199.33 
Paddy Marketing Board
751.99 
529.05 
Road Development Authority
56,902.44 
40,380.64 
Sri Lanka Insurance Corporation
3,629.36 
3,629.36 
Sri Lanka State Plantation 
Corporation
100.00 
78.48 
Sri Lankan Airlines Limited
57,916.23 
50,676.76 
State Printing Corporation
1,165.00 
685.13 
Techno Park Development 
Company Private Limited
750.00 
750.00 
Mihin Lanka Limited
3,162.23 
3,063.15 
19
Reserve Bank of 
India
Central Bank of Sri Lanka
333,123.32 
333,123.32 
333,123.32 
333,123.32 
20 Sampath Bank
Road Development Authority
14,500.00 
14,500.00 
9,886.36 
9,886.36 
21
Sri Lanka Savings 
Bank
Northsea Limited
60.00 
60.00 
54.76 
54.76 
22 UniCredit Bank 
Austria AG
National Water Supply & 
Drainage Board
17,844.22 
17,844.22 
14,388.23 
14,388.23 
23 Paddy Marketing 
Board
Co-operative Wholesale 
Establishment
880.00 
880.00 
729.60 
729.60 
24 Export 
Development Board
Bank of Ceylon and Peoples Bank
60.00 
60.00 
60.00 
60.00 
Grand Total
1,912,054.89 
1,912,054.89 1,384,765.32 
1,384,765.32 
Source : Public Debt Management Office

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85   
 ANNEX II 
Macroeconomic Indicators
TABLE 1 : Key Sectoral Growth Rate % 2023-2025
2023
2024
          2025         
Q1(a)
Q2(a)
GDP
-2.3
5
4.8
4.9
    Agriculture
1.6
1.2
-0.7
2.0
    Industry 
-9.2
11
9.7
5.8
    Services
-0.2
2.4
2.8
3.9
Inflation - GDP Deflator (%)
17.5
3.8
-0.3
5.4
Unemployment Rate (%)
4.7
4.5
3.8
                       
Source : Department of Census and Statistics
(a) Provisional
TABLE 2 : Quarterly Growth Rates of Key Sub-Sectors of Agriculture
Sector
2023(a)
2024(a)
               2025(a)
Q1
Q2
Tea (Mn kg)
256.1
262.7
61.8
73.7
Growth %
1.7
2.6
5.6
6.0
Rubber (Mn kg)
64.4
69.2
15.7
14.3
Growth %
-9.2
7.4
-22.2
-10.8
Coconuts (Mn nuts)
3,169.7
2,790.1
563.1
784.4
Growth %
-6.4
-12.0
-28.5
3.4
Fish ('000 Mt) 
406.6
411.0
103.7
83.5
Growth %
2.4
1.1
0.1%
-10.9
2023
2024
Yala
Maha
yala
Paddy ('000 Mt) 
1,817.0
2,745.3
1976.5
Source : Central Bank of Sri Lanka
(a) Provisional
TABLE 3 : Performance in Industrial Sector : 2023 - 2025                                          
Rs. Mn.
Description
2023
2024(a)
          2025(a)
 Q1
 Q2
Food, Beverages and Tobacco Products 
            899,777 
954,409
287,256
202,751
Growth Rate
                   3.5 
6.1
5.7
1.5
Textile, Wearing Apparel and Leather                    
Related Products
           450,498 
500,210
181,093
102,929
Growth Rate
-12.0
11.0
16.5
9.6
Chemical Products and Basic Pharmaceutical 
Products
             82,949 
90,994
17,642
31,101
Growth Rate
                   0.7 
9.7
1.7
-5.5
Rubber and Plastic Products
              56,157 
60,972
12,895
19,551
Growth Rate
-16.8
8.6
3.4
5.0
Non-metallic Mineral Products
              84,671 
86,813
29,335
25,392
Growth Rate
-0.6
2.5
22.9
17.1
Furniture
             56,089 
-
Growth Rate
-7.8
-
-
-
Total Industrial Sector
        3,003,096 
3,333,008
975,783
809,720
Overall Industrial Growth
-9.2
11.0
9.7
5.8
Source : Department of Census and Statistics
(a) Provisional

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86                                                                      Budget, Economic and Fiscal Position Report - 2026
TABLE 4 : Performance in Electricity Generation and Services Sector : 2024 - 2025
Category 
2024
2025(a)
Q1
Q2
Jul
Jan-Jul
Q1
Q2
Jul
Jan-Jul
Electricity Generaton
 Total Generation (GWh)(Excluding Self Generation) 
4,120
4,164
1,462
9,746
4,220
4,459
1,583
10,261
 Growth Rate 
9.9
5.1
7.6
7.5
2.4
7.1
8.3
5.3
 Hydro (excluding mini hydro) 
1,259
1,244
508
3,010
1,271
1,704
628
3,604
 Growth Rate 
37.2
53.2
65.2
47.8
1.0
37.0
23.8
19.7
 Fuel Oil 
710
593
155
1,458
754
259
158
1,171
 Growth Rate 
-3.9
-40.4
-57.9
-30.6
6.3
-56.3
1.5
-19.7
 Coal 
1,474
1,471
428
3,372
1,383
1,299
381
3,063
 Growth Rate 
-3.0
8.4
17.4
4.1
-6.2
-11.7
-10.9
-9.2
 NCRE (Including mini hydro) (b)
678
856
372
1,905
811
1,196
416
2,423
 Growth Rate 
18.4
7.0
16.8
12.7
19.7
39.7
11.9
27.2
 Hydro: Fuel Oil: Coal: NCRE Ratio 
 Reservoir Water Level % (End Period Aeverage) 
81.2
56.8
75.5
69.9
75.5
65.3
70.1
70.4
Port Services
Q1
Q2
Aug
Jan-Aug
Q1
Q2
Aug
Jan-Aug
 Total Cargo Handled ('000 MT) 
30,504
29,032
11,971
80,713
29,523
31,284
10,866
82,370
 Growth Rate 
34.6
7.6
3.8
14.8
-3.2
7.8
-9.2
2.1
 Total Container Handled ('000 TEUs) (c)
2,009
1,882
635
5,141
1,936
2,036
741
5,435
 Growth Rate 
24.0
2.4
1.3
9.2
-3.6
8.2
16.8
5.7
Telecommunications Services (No. of Subscribers) (d)
Q1
Q2
Q1
Q2
 Fixed Lines ('000) 
2,181
2,155
2,084
2,142
 Growth Rate 
-13.3
-11.7
-4.5
-0.6
 Cellular ('000) 
27,977
29,005
27,214
29,027
 Growth Rate 
-0.5
-0.2
-2.7
0.1
 Total Fixed Lines and  Cellular ('000) 
30,158
31,160
29,297
31,169
 Growth Rate 
-1.6
-1.1
-2.9
0.03
 Internet and email ('000) 
22,513
23,349
24,170
23,686
Source : Central Bank of Sri Lanka
(a) Provisional
(b) NCRE : Non Conventional Renewable Energy
(c) Part of Colombo only
(d) As at the end of the period

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87   
TABLE 5 : Export Performance in 2024 - 2025
USD Mn.
Item
2024
2025
Jan-Aug
Jan-Aug(a)
Agricultural Products
              1,804.0 
2,030.2 
Tea
                 942.3 
1,026.0 
Rubber
                   16.4 
20.8 
Coconut Products
                 272.2 
367.5 
Other Agricultural Products
                 573.2 
615.9 
Industrial Products
              6,665.8 
7,015.4 
Textile and Garments
              3,364.8 
3,595.3 
Petroleum Products
                 709.7 
654.7 
Other Industrial Products
               2,591.3 
2,765.4 
Mineral Export
                   18.8 
14.3 
Other Exports
                   17.7 
16.8 
Total Exports
              8,506.3 
9,076.6 
Source : Central Bank of Sri Lanka
(a) Provisional 
TABLE 6 : Import Performance in  2024 - 2025
USD  Mn.
Item
2024
2025
Jan-Aug
Jan-Aug(a)
Consumer Goods
2,176.3
3,294.7
Cereals and Milling Industry Products
          87.0 
90.9 
Sugar
         253.0 
245.8 
Other Food Products 
         874.1 
1,082.9 
Other Consumer  Goods 
         962.2 
1,875.0 
Intermediate Goods 
      7,750.0 
7,437.4 
Fuel 
2,896.5 
2,520.6 
Wheat and Maize
204.5 
205.1 
Fertilizer 
         102.9 
164.8 
Textile & Clothing
       1,839.3 
1,793.5 
Other Intermediate Goods 
      2,706.8 
2,753.4 
Investment Goods 
2,140.3 
2,597.2 
Other Imports 
             5.9 
11.6 
Total
    12,072.5 
13,340.9 
Source : Central Bank of Sri Lanka
(a) Provisional

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88                                                                      Budget, Economic and Fiscal Position Report - 2026
TABLE 7 : Balance of Payments - 2025
USD Mn.
Item
             2025
Q1(a)
Q2(a)
Current Account Balance
926
501
Trade Balance
-1,540
-1,730
Exports 
3,347
3,145
Imports
4,887
4,875
Services (net)
1,220
839
Receipts
2,035
1,574
Payments
815
735
Primary Income (net)
-527
-500
Receipts
150
163
Payments
677
663
Secondary Income (net)
1,773
1,891
Secondary income: credit
1,815
1,924
Secondary income: debit
42
32
Capital Account (net)
-2
-2
Capital account: credit
1
1
Capital account: debit
3
3
Current and Capital Account (net)         
925
499
Financial Account (net)
629
197
Direct Investment: Assets
17
23
Direct Investment: Liabilities
135
179
Portfolio Investment: Assets
             -71 
              311 
Debt securities
             -71 
              311 
Portfolio Investment: Liabilities
12
-329
Equity and investment fund shares
-80
-4
Debt securities
93
-326
Financial Derivatives
 - 
 - 
Other Investment: Assets
883
-411
Currency and deposits
451
-717
Trade credits and advances
90
57
Other accounts receivable
342
250
Other Investment: Liabilities
414
-714
Currency and deposits
145
-322
Loans
285
-357
Trade credits and advances
-16
-35
Other accounts payable
-
-
Special Drawing Rights (SDRs)
 - 
 - 
Reserve Assets
361
-591
Net Errors and Omissions
-296
-301
Overall Balance
1,761
522
Source : Central Bank of Sri Lanka
(a) Provisional

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Budget, Economic and Fiscal Position Report - 2026	
89   
TABLE 8 : International Reserves
USD Mn.
Item
End 2024
May 2025
Jun 2025
Jul 2025
Aug 2025
Total External Reserves
11,230
11,981
11,752
11,666
 NA 
Months of Imports
7.2
7.3
7.1
7.0
NA
Gross Official Reserves
6,122
6,286
6,081
6,147
6178
Months of Imports
3.9
3.8
3.7
3.7
3.7
Source : Central Bank of Sri Lanka
TABLE 9 : Government Foreign Currency Debt Outstanding
USD Mn. 
Items
End August 2025 
(Provisional) *
Central Government Foreign Debt and Domestic Debt
            102,181 
      Central Government Foreign Debt (a) (b)
             37,308 
      Central Government Domestic Debt  denominated in loacal currency (c) (d)
              62,717 
      Dollar dominated Domestic Debt
                2,156 
            Sri Lanka Development Bonds (SLDBs) (a) (d)
 - 
            Loans Foreign Currency Banking Units (FCBUs) 
 - 
            Domestic Term Loans denominated in foreign currency
               2,128 
            Domestic project loans denominated in foreign currency (d)
                   28 
Source : Public Debt Management Office
(a) Only the Central Government outstanding Foreign Debt are depicted.Included unpaid Principal 
accumulated from the date of debt standstill policy was adopted. Non-resident holdings of T-bill / 
T-bonds are not included. Outstanding amounts of ISBs have not been classified on the current resident/ 
non-resident basis of their holdings.
(b) Foreign Project and Term Loan debt outstanding is compiled based on CS-DRMS reports downloaded 
on 27th September 2025 (Cutoff - end August 2025).  
(c) Includes T- Bonds, T- Bills outstanding amounts published in CBSLwebsite.  Outstanding amounts of 
T-Bills & T- Bonds  have not been classified on the current resident/ non-resident basis of their holdings.
(d) Includes borrowings from Domestic Banks from 2011 to 2019 to finance for development projects 
implemented by Roads Development Authority, Ministry of Health and National Water Supply & Drainage 
Board
* Exchange rate used 1 US $ = 302.4465 (Date = 29 August 2025)

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90                                                                      Budget, Economic and Fiscal Position Report - 2026
TABLE 12 : Commercial Banks' Loans and Advances to the Private Sector - end August 2025 (a)(b)
TABLE 10 :  Movements in Selected Exchange Rates (Against the USD)
Currency
Appreciarion (+)/Depreciation (-)
End 2023 - End 2024
End 2024 - End Aug 2025
Indian Rupee
                           (2.8)
                          (2.4)
Bangladesh Taka
                           (8.2)
                           (1.7)
Parkistan Rupee
                              1.4 
                          (2.0)
Singapore Dollar
                           (3.0)
                            5.9 
Thailand Bhat
                             0.1 
                            5.9 
Taiwan Dollar
                            (6.3)
                            7.2 
Indonesian Rupiah
                            (4.3)
                           (1.6)
Philippine Peso
                            (4.3)
                            1.4 
Korean Won
                          (12.6)
                            6.2 
Japanese Yen
                            (9.6)
                            6.5 
Source : Central Bank of Sri Lanka
TABLE 11 : Central Bank Holdings of Government securities
Rs. Bn.
End Period
Gross (Face Value)
Net of Repos 
(Book Value)
2015
                           105 
                                     79 
2016
                           331 
                                   330 
2017
                             10 
                                     26 
2018
                            46 
                                   274 
2019
                            75 
                                    125 
2020
                           725 
                                   737 
2021
                         1,417 
                                 1,960 
2022
                        2,598 
                                 3,187 
2023
                        2,744 
                                 1,956 
2024
                        2,516 
                                  1,551 
End of Aug 2025
                        2,509 
                                 1,562 
Source : Central Bank of Sri Lanka
Rs. Mn.
             Sector
Amount as a % of Total
1. Agriculture & Fishing
847,792
9.2
of which…
   Tea
189,858
2.1
   Rubber
55,518
0.6
   Coconut
59,529
0.6
   Paddy
81,205
0.9
   Vegetable, Fruit Cultivation and Minor Food Crops
58,011
0.6
   Livestock and Dairy Farming
67,532
0.7
   Fisheries
50,464
0.5
2. Industry
3,596,199
39.1
of which…
   Construction
1,715,829
18.7
      of which…
  --- Personal Housing including Purchasing/Construction/Repairs
865,590
9.4
  --- Staff Housing
76,798
0.8

BEFPR 2026 · file page 107 printed page 93

Budget, Economic and Fiscal Position Report - 2026	
91   
Rs. Mn.
             Sector
Amount as a % of Total
   Food and Beverages
239,167
2.6
   Textiles and Apparel
416,725
4.5
   Wood and Wood Products including Furniture
35,796
0.4
   Paper and Paper Products
52,790
0.6
   Chemical, Petroleum, Pharmaceutical, Healthcare and Rubber and 
Plastic Products   
213,831
2.3
   Non-metallic Mineral Products
16,889
0.2
   Basic Metal  Products
65,567
0.7
   Fabricated Metal Products, Machinery and Transport Equipment
287,415
3.1
   Other Manufactured Products
50,069
0.5
3. Services
2,777,752
30.2
of which…
   Wholesale and Retail Trade
970,576
10.6
   Tourism
290,471
3.2
   Financial and Business Services
618,426
6.7
   Transport
79,638
0.9
   Communication and Information Technology
143,250
1.6
   Printing and Publishing 
23,122
0.3
   Education
50,844
0.6
   Health
57,934
0.6
   Shipping, Aviation, Supply and Freight Forwarding
51,847
0.6
4. Personal Loans and Advancse(c)
1,968,998
21.4
of which…
   Consumer Durables
75,206
0.8
   Pawning
770,253
8.4
   Credit Card
177,461
1.9
   Personal Education
6,164
0.1
   Personal Healthcare
1,419
0.0
5.Other
879,121
9.6
 Total(d)
9,190,741
100.0
Source: Central Bank of Sri Lanka
(a) Includes loans, overdrafts, bills discounted and purchased and excludes cash items in the process of 
collection
(b) Provisional
(c) Excludes personal housing loans, which have been included under ‘Construction’ classified under 
‘Industry’ and includes Safety Net Scheme related loans
(d) Total credit to the private sector as per the Monthly Survey differ from that in the Monetary Survey due 
to differences in the compilation methodologies
Note: 
The Economic Research Department (ERD) of the Central Bank of Sri Lanka (CBSL) commenced the Monthly 
Survey on Loans and Advances by Licensed Commercial Banks (LCBs) to the private sector, with a detailed 
breakdown of credit extended to the key sectors of the economy from April 2025. Accordingly, the existing 
Quarterly Survey on the Commercial Banks’ Loans and Advances to the private sector (Quarterly Survey) 
was discontinued. The purpose of the new survey is to collect sector-wise credit data on a monthly basis, 
thereby enabling the monitoring and analysis of high-frequency movements in private sector credit. 
Accordingly, direct comparisons between the new Monthly Survey data and the earlier quarterly series are 
not appropriate, as variations in growth patterns across sub sectors during the transition period largely 
reflect reclassifications introduced at the bank level.

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92                                                                      Budget, Economic and Fiscal Position Report - 2026
TABLE 13 : Interest Rate Movements in 2024 - 2025
Interest Rate
End 
Dec 
2024
End 
May 
2025
End 
Jun 
2025
End 
 Jul
2025
End 
Aug 
2025
Policy Rates of the Central Bank
Standing Deposit Facility Rate (SDFR)
7.50
7.25
7.25
7.25
7.25
Standing Lending Facility Rate (SLFR)
8.50
8.25
8.25
8.25
8.25
Weighted Average Call Money Rate (AWCMR)
8.00
7.75
7.75
7.80
7.86
Weighted Average OMO Auction Rate 
(Reverse Repo)- Overnight
        - 
 - 
 - 
         - 
-
Treasury Bill Rates
91-days
8.62
7.55
7.55
7.62
7.58
182-days
8.77
7.77
7.75
7.91
7.89
364 -days
8.96
7.98
7.94
8.03
8.03
Lending Rates
Average Weighted Prime  Lending 
Rate(AWPR) (weekly)
8.90
8.35
8.11
8.07
7.97
Average Weighted Prime  Lending Rate 
(AWPR) (monthly)
8.92
8.45
8.22
8.02
8.10
Average Weighted Lending Rate(AWLR)    
11.93
11.67
11.56
11.50
-
Deposit Rates
Average Weighted Deposit Rate (AWDR)
7.53
6.98
6.93
6.88
-
Average Weighted Fixed  Deposit Rate 
(AWFDR) 
9.27
8.56
8.52
8.46
-
Source : Central Bank of Sri Lanka

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Budget, Economic and Fiscal Position Report - 2026	
93   
ANNEX III
Assumptions for Revenue Estimates - 2026
The assumptions are made in line with Section 49 of the Public Financial Management Act, 
No. 44 of 2024 (PFMA). 
The revenue estimates for 2026 are based on key factors including trend or long-run 
averages for growth rates, the actual revenue collected in 2024 and revenue progress in 
first nine months of 2025, revenue gains expected from the new measures, developments 
of the macro-economic variables, and the staff’s best judgments on the performance of the 
revenue.  
The broad assumptions are detailed as follows:
•	
The economy is expected to grow by 4 - 5 percent in 2026 supported by both 
domestic and external fronts. The growth is expected to expand in all three sectors 
of the economy ie. Industry, Services and Agriculture. 
•	
The average inflation is expected gradually increase towards the target of 5 percent 
by mid-2026.
•	
Unemployment rate is expected to be below 5.0 percent in 2026.
•	
Exchange rate is expected to be stable in 2026.
•	
Marginal decline in import taxes related to motor vehicles compared to 2025 due 
to the normalization of demand for the vehicles in 2026. 
•	
Full implementation of the Public Financial Management Act to improve fiscal policy 
for better macroeconomic management.
•	
Strengthening the revenue collection in the Inland Revenue Department (IRD), Sri 
Lanka Customs (SLC) and the Excise Department through digitalization efforts, 
reducing corruption vulnerabilities and enhancing the effectiveness of revenue 
administration strategies.  
•	
Increase of tax compliance at IRD with introduction of mandatory e-filling for 
individuals, streamlining the refund process and removal of simplified Value Added 
Taxes (S-VAT), enforcement of usage of Point of Sales (POS) machines, introduction 
of e-invoicing system and increased risk-based audit efficiency.
•	
Establishment of Gambling Regulatory Authority to regulate and control gambling 
industry while ensure the collection of revenue and transparency and good 
governance in industry of gambling.

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94                                                                      Budget, Economic and Fiscal Position Report - 2026
Item / Engine Capacity
Rate
(i) Cars - Petrol
Less than 1,000 cc                              
Rs.1,992,000/-per unit or Rs.2,450/-per cm3
1,001 cc -1,300 cc                                                  
  Rs.3,850/-per cm3
1,301 cc -1,500 cc                                                  
  Rs.4,450/-per cm3
1,501 cc -1,600 cc                                                 
   Rs.5,150/-per cm3
1,601 cc -1,800 cc                                                 
   Rs.6,400/-per cm3
1,801 cc -2,000 cc                                                 
   Rs.7,700/-per cm3
2,001 cc -2,500 cc                                                  
  Rs.8,450/-per cm3
2,501 cc -2,750 cc                                                  
  Rs.9,650/-per cm3
2,751 cc -3,000 cc                                                 
   Rs.10,850/-per cm3
3,001 cc -4,000 cc                                                 
  Rs.12,050/-per cm3
Exceeding 4,000 cc                                                   
Rs.13,300/-per cm3
(i) Cars - Diesel
Less than 1,500 cc                                                
     Rs.5,550/-per cm3
1,501 cc -1,600 cc                                                    
Rs.6,950/-per cm3
1,601 cc -1,800 cc                                                
    Rs.8,300/-per cm3
1,801 cc -2,000 cc                                                    
Rs.9,650/-per cm3
2,001 cc -2,500 cc                                                  
 Rs.9,650/-per cm3
2,501 cc -2,750 cc                                                  
  Rs.10,850/-per cm3
2,751 cc -3,000 cc                                             
      Rs.12,050/-per cm3
3,001 cc -4,000 cc                                              
     Rs.13,300/-per cm3
Exceeding 4,000 cc                                               
    Rs.14,500/-per cm3
(ii) Cars - Hybrid / Petrol
Less than 1,000 cc                                               
  Rs.1,810,900/-per unit
1,001 cc -1,300 cc                                                 
   Rs.2,750/-per cm3
1,301 cc -1,500 cc                                               
     Rs.3,450/-per cm3
1,501 cc -1,600 cc                                                   
 Rs.4,800/-per cm3
1,601 cc -1,800 cc                                                  
  Rs.6,300/-per cm3
1,801 cc -2,000 cc                                                    
Rs.6,900/-per cm3
2,001 cc -2,500cc                                                  
  Rs.7,250/-per cm3
2,501 cc -2,750 cc                                                  
  Rs.8,450/-per cm4
2,751 cc -3,000 cc                                                    
Rs.9,650/-per cm4
3,001 cc -4,000 cc                                                  
 Rs.10,850/-per cm5
Exceeding 4 000 cc                                                  
 Rs.12,050/-per cm5
(iv) Cars - Hybrid / Diesel
Less than 1,000 cc                                                   
 Rs. 4,150/-per cm3
1,001 cc -1,300 cc                                                    
Rs. 4,150/-per cm3
1,301 cc -1,500 cc                                                   
 Rs. 4,150/-per cm3
1,501 cc -1,600 cc                                                  
  Rs.5,550/-per cm3
1,601 cc -1,800 cc                                                   
 Rs.6,900/-per cm3
1,801 cc -2,000 cc                                                    
Rs.8,350/-per cm3
2,001 cc -2,500 cc                                                   
 Rs.8,450/-per cm3
2,501 cc -2,750 cc                                                   
 Rs.9,650/-per cm3
2,751 cc -3,000 cc                                                  
  Rs.10,850/-per cm3
3,001 cc -4,000 cc                                                   
Rs.12,050/-per cm3
Exceeding 4,000 cc                                               
    Rs.13,300/-per cm3
TABLE 1 : Excise (Special Provisions) Duty Structure for Motor Vehicles (As at 31.10.2025)

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Budget, Economic and Fiscal Position Report - 2026	
95   
Item / Engine Capacity
Rate
(v) Electric Cars
Car- Electric - Charged by 
External Electric Source
Less than 50kW                                                     
  Rs.18,100/-per kW
51kW -100kW                                                     
  Rs.24,100/-per kW
101kW -200kW                                                     
 Rs.36,200/-per kW
Exceeding 200kW                                                 
    Rs.96,600/-per kW
Car- Electric -  (ICE only for 
charging electric accumulator)
Less than 50kW                                                     
Rs.30,770/-per kW
51kW -100kW                                                     
Rs.40,970/-per kW
101kW -200kW                                                     
Rs.41,630/-per kW
Exceeding 200kW                                                 
Rs.111,090/-per kW
(vi) Vans
13 -25 Persons/ Diesel                                             
Rs. 5,432,650/-per unit
13 -25 Persons/ Petrol                                                 
Rs.2,100/-per cm3
Less than 13 Persons/ Diesel                 
200%
Less than 13 Persons/ Petrol                   
150%
Source : Department of Fiscal Policy
TABLE 2 : Excise (Special Provisions) Duty Structure for Cigarettes (As at 31.10.2025)
Category 
Rs. per 1,000 Sticks
Cigarettes each not exceeding 60mm. in length
                              19,350 
Cigarettes each exceeding 60mm. but not exceeding 67mm in length
                              50,150 
Cigarettes each exceeding 67mm. but not exceeding 72mm in length
                              71,450 
Cigarettes each exceeding 72mm. but not exceeding 84mm in length
                             81,000 
Cigarettes each exceeding 84mm. in length
                             90,050 
Source : Department of Fiscal Policy
TABLE 3 : Excise (Special Provisions) Duty Structure for Petroleum Products (As at 31.10.2025)
Item
Rs. Per litre
Petrol
72.00 
Diesel - Auto
50.00 
Diesel - Super
57.00 
Source : Department of Fiscal Policy

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96                                                                      Budget, Economic and Fiscal Position Report - 2026
TABLE 4 : Excise Duty Structure under Excise Ordinance (As at 31.10.2025)
Classifications 
Duty Rate per 
liter/kg (Rs.)
Liquor                
Special Arrack (750ml)
             7,244 
Molasses, Palmyrah, Coconut and Processed Arrack (750ml)
             7,752 
Locally Manufactured Foreign Liquar (750ml)
             7,969 
Malt Liquor of Five Per centum (5%) and below of absolute strength (625ml)
             5,735 
Malt Liquor of more than Five Per centum (5%) of absolute strength (625ml)
             6,015 
Wine (625ml)
             5,735 
Sake (625ml)
             1,567 
Milk Punch (750ml)
             3,982 
Cider (750ml)
             4,347 
Raw materials used for production of Ethanol
Coconut Toddy (per bulk litre)
                   5 
Molasses (per bulk kg)
                  10 
Rice used for production of spirits by distillation (per bulk kg)                                       
                  10 
Maize used for production of spirits by distillation (per bulk kg)
                  10 
Fruit used for production of spirits by distillation (per bulk kg)
                  10 
Foreign liquor
Imported Malt Liquor (Beer)
                135 
Imported Wine
               230 
Any other imported Foreign Liquor (which does not come under malt liquor or 
wine)
               650 
Non-potable Spirits (per bulk kg)
                   6 
Source : Department of Fiscal Policy
TABLE 5 : Ports and Airports Development Levy (As at 31.10.2025)
Category
Rate
General Rate
10.0%
Concessionary Rates
7.5%, 5.0%, 2.5%
Source : Department of Fiscal Policy
TABLE 6 : Value Added Tax (VAT) (As at 31.10.2025)
Description
                Item
Zero Rate
Export Goods/Services
Standard Rate (18%)
General Items
Exemptions
Goods and Services which are listed in the Part III of the 
first shedule of the VAT Act.
Source : Department of Fiscal Policy

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Budget, Economic and Fiscal Position Report - 2026	
97   
TABLE 7 : Social Security Contribution Levy  (SSCL) (As at 31.10.2025)
Description
Item
Rate ( 2.5%)
–
Exemptions
Articles and Services  which are listed in Part IA and Part II  
of the SSCL Act
Source : Department of Fiscal Policy
TABLE 8 : Customs Import Duty Tariff Structure (As at 31.10.2025)
Duty Rate
No of HS Codes
Free 
                   3,724 
15%
                      526 
20%
                   2,659 
Specific 
                     852 
Specific & Advelorum (Mixed)
                      412 
Source : Department of Trade and Investment Policy
TABLE 9 : Rent Income
Rs. Mn.
Item
2024
(Provisional)
2025
    Revised
2026   
Estimate
Rent on Government Buildings & Housing
             1,804 
2,100
2,250
Rent on Crown Forests
             974 
1,110
1,300
Rent from Land & Other
                148 
200
220
Lease Rental from Regional Plantation Companies
             2,053 
2,290
2,230
Others
             1,450 
1,000
1,500
Total Rent Income
6,428
6,700
7,500
Source : Department of Fiscal Policy

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98                                                                      Budget, Economic and Fiscal Position Report - 2026
TABLE 10 : Fees and Charges
Rs. Mn.
2024 
Provisional
2025 Revised 2026 Estimate
Service Charges by Government Press
           2,099 
800
1,200
Fees of Passport, Visas and Dual Citizenship
          38,012 
38,000
31,000
Embarkation Levy 
               38,312 
42,000
40,000
Fees under the Motor Traffic Act & other Receipts
          14,464 
17,000
16,000
From others Various Sources 
          61,844 
58,200
60,600
Total
154,731
156,000
148,800
Source : Department of Fiscal Policy
Item
End Sept. 2024
End Sept. 2025
1
Sprats
100
100
2
Potatoes
50
80
3
Red Onions
50
50
4
B’onions
10
50
5
Garlic
50
50
6
Watana - Whole
5
5
Watana - Split
10
10
7
Chickpeas - Whole
5
5
Chickpeas - Split
10
10
8
Green gram
300
300
9
Lentils- Whole
25 Cents
25 Cents
Lentils- Split
25 Cents
25 Cents
10
Chillies- Not Crushed or ground
100
100
Chillies-  Crushed or ground
125
125
11
Canned fish
200
200
12
Sugar
50
50
13
Black gram -Whole
300
300
Black gram –Skinned 
300
300
14
Cowpea
300
300
15
Kurakkan
300
300
Millet/ Other
300
300
16
Maldive fish
302
302
17
Dried fish
100
100
18
Orange – fresh 
600
600
19
Grapes – fresh 
600
600
20
Apples
600
600
21
Coriander-  Not Crushed or ground
26
26
Coriander-   Crushed or ground
52
52
22
Cumin
162
162
23
Fennel
162
162
24
Turmeric -  Not Crushed or ground
102
102
Turmeric -  Crushed or ground
360
360
25
Mathe seeds
50
50
TABLE 11 : Special Commodity Levy Rates
Rs. per kg.

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Budget, Economic and Fiscal Position Report - 2026	
99   
Item
End Sept. 2024
End Sept. 2025
26
Kurakkan flour
150
150
27
Black gram flour
325
325
28
Ground nuts
220
220
29
Mustard seed
62
62
30
Palm oil / Other Veg. oil - Crude
250
250
Palm olen
255
255
Palm stearin 
250
250
Refine Palm oil
275
275
Other Veg.oil Refine
275
275
Plam Kernal -  Crude
250
250
                          Refine
275
275
Coconut oil (Crude )
125
125
Coconut oil (Refine)
150
150
31
Fish
10% or Rs. 400
10% or Rs. 400
32
Mackerel fish (And Jac /Horse Mackerel  Duty Waiver) 
6
6
33
Yogurt
2000
2000
34
Butter
1500 (other 
2000)
1500 (other 
2000)
35
Margarine – Fat content 80%>
650
650
                 Margarine   – Fat content 80%<
650
650
36
Salt
40(Waiver-30)
40(Waiver-30)
37
Dates
200
200
38
Grapes - dried
600
600
39
Mangoesteen (fresh& dried)
200
200
40
Orange- dried
125
125
41
Pears
220
220
42
Cherries – Other 
315
315
43
Plums and sloes
250
250
44
Kiwifruit
175
175
45
Pomegranate (Other)
600
600
46
Grated /powdered Cheese
600
600
47
Clementines – fresh 
120
120
48
Clementines – dried 
250
250
49
Other (citrus) fruits   – fresh 
120
120
50
Other( citrus) fruits – dried 
250
250
51
Grapefruit –fresh 
285
285
52
Grapefruit – dried 
300
300
53
Lemon- fresh 
350
350
54
Lemon- dried
400
400
55
Other citrus fruits - fresh
300
300
56
Other citrus fruits – dried 
375
375
57
Quinces 
350
350
58
Apricots
350
350
59
Cherries - Sour
330
330
60
Peaches and Nectarines 
310
310
61
Vegetable fats and oils 
160
160
62
Margarine – liquid 
200
200
63
 Rice
65
65
64
Maize
25
25
Source : Department of Trade and Investment Policy