Mid-Year Fiscal Position Report 2026

Mid-Year Report 2026 · file page 1

MID-YEAR
FISCAL POSITION REPORT
	
	
	
	 	
2026
Ministry of Finance, Planning and  Economic Development 
Sri  Lanka
October 31, 2026

Mid-Year Report 2026 · file page 2

MID-YEAR 
FISCAL POSITION REPORT 2026
Issued under Section 50 of the 
Public Financial Management Act, No. 44 of 2024
Anura Kumara Dissanayake
Minister of Finance, Planning and Economic 
Development 
October 31, 2026

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iii
MID-YEAR FISCAL POSITION REPORT 2026
Issued by the Hon. Minister of Finance, Planning and Economic Development 
Under section 50 of the Public Financial Management Act, No. 44 of 2024
In terms of Section 50 of the Public Financial Management Act, No. 44 of 2024, the Minister 
of Finance is required to release the Mid-Year Fiscal Position Report to the public and publish 
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 laps of the ten months from the date of the passing of the 
Appropriation Act of the relevant year, whichever is later and thereafter lay before Parliament. 
The purpose of this report is 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.
The report contains the estimated and actual government revenue, expenditure, cash 
flows and borrowings for the first six months of 2026. The report also provides provisional 
budget outturn for the first six months of 2026 and updated information on macroeconomic 
performance, including monetary sector developments, inflation, foreign financing, 
government debt and official reserves as well as the performance of state-owned enterprises.

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v
Table of Contents
Page 
No.
CHAPTER 1
Economic Perspectives
1.1
Overview
1
1.2
Inflation
3
1.3
Money & Credit
4
1.4
Stock Market 
5
1.5
External Sector Developments 
5
1.6
Global Economic Perspectives
8
1.7
Global Trade
10
1.8
Monetary and Financial Sector 
11
CHAPTER 2
Fiscal Developments
2.1
Overview 
12
2.2
Government Revenue
14
2.3
Government Expenditure
27
2.4
Performance of the Cash Flow of the General Treasury
33
CHAPTER  3
Performance of State Owned Enterprises
3.1
Overview
35
3.2
Review of the Ten Major State Owned Enterprises 
(SOBEs)
35
CHAPTER  4
Foreign Financing and Management of Government Debt
4.1
Overview
44
4.2
Government Debt Stock
44
4.3
Borrowing Limit Utilization
45
4.4
Foreign Financing
45
4.5
Debt Service Payments
46
4.6
Progress of Debt Restructuring Programme
46
4.7
Government Guarantees
47

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vii
Key Economic Indicators
Indicator
Period
Unit
Value
2025
2026
(Provisional)
REAL SECTOR
 
 
 
 
Economic Growth
First Half
%
4.8
4.7
   Agriculture
First Half
%
0.6
-0.6
   Industry
First Half
%
7.9
7.2
   Services
First Half
%
3.3
3.1
Inflation (Year on Year)(CCPI,2021=100)
End June
%
-0.6
6.8
Unemployment Rate
2nd Quarter
%
3.7
4.0
Labour Force Participation Rate
2nd Quarter
%
49.1
50.0
FISCAL SECTOR
 
 
Budget Balance
Jan-Jun
Rs. Mn.
-405,603
9,509
Total Revenue
Jan-Jun
Rs. Mn.
2,321,719
2,954,189
    Tax Revenue
Jan-Jun
Rs. Mn.
2,152,087
2,710,552
    Non Tax Revenue
Jan-Jun
Rs. Mn.
169,632
243,637
Total Expenditure
Jan-Jun
Rs. Mn.
2,730,707
2,946,494
Recurrent Expenditure
Jan-Jun
Rs. Mn.
2,506,828
2,669,889
Public Investment
Jan-Jun
Rs. Mn.
228,064
280,071
Government Debt (Net basis)
End June
Rs. Bn.
29,635
31,278
EXTERNAL SECTOR
 
 
Exports
Jan-Jun
USD Mn.
6,492
6,903
   o/w  Agriculture Exports
Jan-Jun
USD Mn
1,428
1,450
             Industrial Exports
Jan-Jun
USD Mn
5,045
5,425
                    Textile and Garments
Jan-Jun
USD Mn
2,606
2,451
                    Other
Jan-Jun
USD Mn.
2,439
2,974
             Mineral Exports
Jan-Jun
USD Mn.
10
18
Imports
Jan-Jun
USD Mn.
9,762
12,392
             Consumer Goods
Jan-Jun
USD Mn.
2,316
3,037
             Intermediate Goods
Jan-Jun
USD Mn.
5,576
7,059
                    o/w Petroleum Products
Jan-Jun
USD Mn.
1,996
3,168
             Investment Goods
Jan-Jun
USD Mn.
1,863
2,284
Trade Balance
Jan-Jun
USD Mn.
-3,270
-5,489
Tourist Arrivals
Jan-Jun
No.
1,168,044
1,146,573
Earnings From Tourism
Jan-Jun
USD Mn.
1,713
1,511
Workers' Remittances
Jan-Jun
USD Mn.
3,738
4,605
Overall Balance of Payments (BOP)
Jan-Jun
USD Mn.
522
136
Gross Official Reserves
End Jun
USD Mn.
6,081
6,458
   Exchange Rate (End Month)
End Jun
Rs. Per USD
299.97
336.66
Exchange Rate (Monthly Average)
Jan- Jun
Rs. Per USD
297.80
317.84
MONETARY SECTOR
 
 
Standing Deposit Facility Rate (SDFR) 
End Jun
%
7.25
8.25
Standing Lending Facility Rate (SLFR)
End Jun
%
8.25
9.25
Statutory Reserve Requirement (SRR) 
End Jun
%
2.00
2.00
Commercial Bank Average Weighted New 
Lending  Rate (AWNLR)
End Jun
%
10.28
12.13
Commercial Bank Average Weighted 
Lending Rate (AWLR)
End Jun
%
11.56
12.16
W.A. Yield Rate of Treasury Bills (91 Days)
End Jun
%
7.55
10.14
W.A. Yield Rate of Treasury Bills (364 Days)
End Jun
%
7.94
10.17
Growth in Money Supply (M2b)
Jun 2026/ Jun 2025
%
10.4
11.5
Growth in Credit to the Private Sector
Jun 2026/ Jun 2025
%
17.9
27.4

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viii
Sri Lanka: Selected Indicators
Indicator
Period
Unit
Value
Electricity
 
 
 
Electrification Level 
2016
%
         99.3
Water
 
 
 
Access to Safe Drinking Water
2025
% of Population
93.9
Access to Pipe borne Water 
2025
% of Population
62.3
Roads
 
 
 
Road Density
2025
Km/Km2
          0.19
Total Road Length
2023
Km
    1 44,967
Communication
 
 
 
Telephone Density including Cellular Phones
2025
Per 100 persons
        147.6
Access to Internet
2025
Per 100 persons
109.6
Education
 
 
 
General Education
 
 
 
Primary Net Enrolment Ratio
2025
%
95.5
Student/Teacher Ratio (Government   Schools)
2025
Number
15.5
Literacy Rate (Average)
2024
%
         93.3
Computer Literacy Rate (First 06 months)
2025
%
         38.4 
University Education
 
 
 
Student/Teacher Ratio
2025
Number
26.3
Age Specific Enrolment Ratio (Age 19–22   yrs) (a)
2025
%
          10.9
Health
 
 
 
Hospitals (Practicing Western Medicine)
2025
Number
        628
Beds 
2025
Number
89,141
Hospital Beds 
2025
Per 1,000 persons
           4.2
Persons per Doctor
2025
Number
       905
Population
 
 
 
Population Density
2025 
Persons per  sq. km
          349
Population Growth
2025
%
-0.7
Life Expectancy at Birth
2017
Years 
         75.5 
Infant Mortality Rate
2021
Per 1,000 live births
           6.0
Maternal Mortality Rate
2022
Per 1,000 live births
         22.6 
Crude Birth Rate
2025
Per 1,000 persons
          9.9
Crude Death Rate
2025
Per 1,000 persons
           7.9
Dependency Ratio
2025
%
         49.8 
Poverty
 
 
 
Poverty Head Count Index
2019
%
           14.3
Gini Coefficient of Household Income
2019
Coefficient 
          0.46
Poverty Gap Index
2019
%
2.8
Average Daily Calorie Intake
2019
Kilocalories
         2,120
International Rankings
 
 
  Rank 
Human Development Index
2025
Rank out of 193 Countries
               89
Corruption Perception Index
2025
Rank out of 182 Countries
107
Global Competiveness Index
2019
Rank out of 141 Countries
               84
Economic Freedom Index
2025
Rank out of 184 Countries
144
Global Peace Index
2026
Rank out of 163 Countries
67
e-Government Development Index
2024
Rank out of 193 Countries
               98
(a) Only includes internal enrolment of students

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1
CHAPTER 1
Economic Perspectives
1.1 Overview
The Sri Lankan economy remained resilient 
amid significant twin shocks: Cyclone 
Ditwah and the energy crisis arising from 
the conflict in Middle East. Economic activity 
expanded by 4.7 percent in the first half of 
2026, supported by strong consumption 
and investment, making twelve consecutive 
quarters of growth. Headline inflation as 
measured by the year-on-year change in 
the Colombo Consumer Price Index (CCPI, 
2021=100) remained in single digit but 
trended upward, driven by higher fuel prices, 
and stood at 8.0 percent in September 2026. 
The Central bank of Sri Lanka (CBSL) expects 
inflation to remain below 5 percent level 
from the second half of 2027 onwards. Gross 
Official Reserves (GOR) reached USD 6.9 
billion at the end of August 2026 equivalent to 
more than 3.0 months of imports. Reflecting 
the normalization in credit extension to both 
vehicle financing and corporate lending, 
credit to the private sector has increased 
by 24.5 percent  in the first eight months 
of 2026, following an expansion of 20.5 
percent in 2025.  Tax revenue increased 
by 20.0 percent to Rs. 3,683 billion in the 
first eight months of 2026 from Rs. 3,068 
billion in the same period of 2025, reflecting 
the improved revenue administration and 
stronger economic activity. In addition, debt 
restructuring has been largely concluded. 
Sri 
Lanka 
has 
recorded 
noticeable 
improvements 
across 
several 
major 
international index rankings and global 
assessments in 2025 and 2026, driven by 
macro-stabilization and structural reforms.
Key Improvements in Global Rankings:
• Corruption 
Perceptions 
Index 
(2025/2026): Released by Transparency 
International Sri Lanka improved by 14 
places to rank 107th globally, raising its 
score from 32 to 35 out of 100. 
• Investor 
Relations 
and 
Debt 
Transparency 
(2026): 
Ranked 
4th 
globally 
for 
top-performing 
improvements in investor relations and 
5th in debt transparency by the Institute 
of International Finance. 
• Sovereign Credit Rating (2026): Fitch 
Ratings upgraded Sri Lanka's Long-Term 
IDRs to 'B-' from 'CCC+' on the back of 
improved fiscal balances and reserve 
position.
• Travel and Tourism Development Index 
(2026): The World Economic Forum 
ranked Sri Lanka 10th worldwide for 
the fastest improvement, with its index 
score rising by 4.33 percent compared 
to 2024. 
• Global Peace Index (2026): Sri Lanka 
climbed 14 places to rank 67th globally 
(up from 97th in 2025) and secured the 
second position in South Asia. 
The Government remains committed to the 
economic reform agenda supported by the 
International Monetary Fund’s Extended 
Fund 
Facility 
(IMF-EFF). An 
IMF 
team 
concluded the Seventh Review and the 2026 
Article IV Consultation and reached Staff-
level Agreement on October 04, 2026. Upon 
approval of the review by the IMF Executive 
Board, USD 345 million will become available 
in financing. 
All sectors of the economy except for the 
agriculture sector expanded during the first 
half of 2026. The industry sector grew by 7.2 
percent, mainly driven by significant growth 
in construction, the manufacture of food, 
beverages and tobacco products, and mining 
and quarrying. The services sector grew 
by 3.1 percent, supported by expansion in 
wholesale and retail trade, transportation of 
goods and passengers, and financial service 
activities. Taxes less subsidies on goods

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2
expanded by 13.5 percent, an acceleration of 
2.8 percentage points from the 10.7 percent 
expansion recorded in the corresponding 
period of 2025. Meanwhile, the agriculture 
sector contracted by 0.6 percent, mainly 
due to contractions in animal production, 
rice cultivation, marine fishing, and marine 
aquaculture sub sectors. 
Headline inflation as measured by the year-
on-year change in the CCPI (2021=100), 
increased to 8.0 percent in August and 
September 2026 from 7.3 percent in July 
2026, while headline inflation, as measured 
by the year-on-year change in the National 
Consumer Price Index (NCPI, 2021=100), 
increased to 8.1 percent in August 2026 from 
7.2 percent in July 2026. Both increases were 
mainly due to higher domestic energy and 
food prices. Near-term inflation is projected 
to remain above the 5 percent target before 
moderating steadily towards it. Meanwhile, 
year-on-year core inflation, which reflects 
underlying inflation trends in the economy, 
remained at 5.1 percent (CCPI, 2021=100) in 
August 2026. Core inflation is projected to 
rise over the coming period, aligning closely 
with the inflation target. Although inflation 
is set to experience a temporary, short-term 
uptick, medium-term inflation expectations 
remain broadly anchored to the target.
The Central Bank of Sri Lanka (CBSL) 
tightened monetary policy in May 2026. 
Together with other policy measures taken 
by the Government and the Central Bank, this 
tightening is expected to feed through to the 
economy gradually, helping to slow credit 
growth and ease the buildup of demand 
pressures in the period ahead. The CBSL 
raised the Overnight Policy Rate (OPR) by 
100 basis points to 8.75 percent in May 2026, 
in view of the elevated inflation forecast, the 
potential second-round effects of energy 
price adjustments on headline inflation, 
continued expansion in private sector credit 
fueling import demand, pressures on the 
external sector, and the risk of de-anchoring 
inflation 
expectations. Accordingly, 
the 
Standing Deposit Facility Rate (SDFR) and 
the Standing Lending Facility Rate (SLFR), 
which are linked to the OPR, increased to 
8.25 percent and 9.25 percent, respectively. 
The stock market performed strongly, 
with the All Share Price Index (ASPI, 1985 = 
100) rising by 23.5 percent year-on-year to 
22,263.3 points, and the Standard & Poor's 
Sri Lanka 20 Index (S&P SL20, 2004 = 1,000) 
rising by 15.9 percent year-on-year to 6,205.1 
points at the end of June 2026.
Sri Lanka's external sector came under 
pressure in the first eight months of 2026, as 
the intensification of  the conflict in the Middle 
East raised import expenditure through 
higher global fuel prices and weighed on 
tourism earnings. The current account 
recorded a deficit of USD 291 million during 
the first eight months of 2026, compared 
to a surplus in the corresponding period of 
2025, reflecting the impact of the Middle 
East conflict. The trade deficit also widened 
to USD 7.2 billion during the first eight 
months of 2026, from USD 4.3 billion in the 
corresponding period of 2025, as higher 
import expenditure more than offset the 
increase in export earnings. Merchandise 
exports during the first eight months 
increased by 3.3 percent to USD 9.4 billion, 
compared to USD 9.1 billion in the same 
period of 2025. Merchandise imports during 
the first eight months rose by 24.1 percent to 
USD 16.6 billion, compared to USD 13.3 billion 
in the same period of 2025, driven mainly by 
higher expenditure on crude oil and vehicle 
imports. 
Workers' remittances increased significantly, 
by 19.8 percent to USD 6.1 billion in the first 
eight months of 2026, compared to USD 5.1 
billion in the same period of 2025. However, 
earnings from tourism declined by 10.0 
percent to USD 2.1 billion in the first eight 
months of 2026, compared to USD 2.3 billion 
in the same period of 2025, mainly due to 
a 2.0 percent decline in tourist arrivals and 
the downward revision of average per day 
tourist spending. 
By the end of August 2026, GOR stood at 
USD 6.9 billion, including the swap facility 
with the People's Bank of China (PBOC). The 
Sri Lankan rupee depreciated by 5.5 percent 
against the US dollar year-to-date as at the 
end of August 2026.
The following sections present developments 
in the first six months of 2026, in accordance

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3
with Section 50 of the Public Financial 
Management Act, No. 44 of 2024.
1.2 Inflation
Headline inflation, as measured by the year-
on-year (Y-O-Y) change in the Colombo 
Consumer Price Index (CCPI, 2021 = 100), 
increased sharply to 6.8 percent in June 2026, 
from 2.3 percent in January 2026. Headline 
inflation remained low in February and 
March 2026, at 1.6 percent and 2.2 percent 
respectively, before accelerating markedly 
to 5.4 percent in April 2026. This acceleration 
was mainly due to the pass-through of 
continued upward adjustments to domestic 
energy prices, reflecting the surge in global 
commodity prices, particularly petroleum, 
arising from heightened tensions in the 
Middle East. The upward trend persisted 
through May and June 2026. The increase in 
June was driven largely by the Food category, 
which contributed 1.4 percentage points to 
the 2.1 percent month-on-month rise in the 
CCPI, owing mainly to higher prices of fish 
and vegetables. 
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), also 
trended upward during the first half of 2026. 
It increased to 4.0 percent in June 2026 from 
2.3 percent in January 2026. 
TABLE 1.1 | Movements in Inflation (%) 
Year
Month
CCPI 
NCPI
Headline 
Inflation
Core *
Inflation
Headline 
Inflation
Core* 
Inflation
Point to 
Point
Annual 
Average
Point to 
Point
Annual 
Average
Point to 
Point
Annual 
Average
Point to 
Point
Annual 
Average
2025
January
-4.0
0.4
1.2
3.2
-4.0
0.7
-0.2
2.3
February
-4.2
-0.5
0.7
3.0
-3.9
0.0
-0.6
2.0
March
-2.6
-0.8
0.7
2.8
-1.9
-0.4
-0.6
1.7
April
-2.0
-1.1
0.8
2.6
-0.8
-0.7
-0.1
1.4
May
-0.7
-1.2
1.2
2.4
0.6
-0.8
0.3
1.2
June
-0.6
-1.4
1.5
2.1
0.3
-0.9
0.6
0.9
July
-0.3
-1.6
1.6
1.9
0.7
-1.1
0.9
0.7
August
1.2
-1.5
2.0
1.8
1.5
-1.0
1.5
0.7
September
1.5
-1.4
2.0
1.7
2.1
-0.9
1.9
0.7
October
2.1
-1.2
2.2
1.6
2.7
-0.6
2.1
0.7
November
2.1
-0.8
2.4
1.6
2.4
-0.2
2.2
0.8
December
2.1
-0.5
2.7
1.6
2.9
0.2
2.6
0.9
2026
January
2.3
0.0
2.3
1.7
2.4
0.7
2.2
1.1
February
1.6
0.5
2.1
1.8
1.6
1.2
2.2
1.3
March
2.2
0.9
2.5
2.0
2.4
1.5
2.7
1.6
April
5.4
1.6
3.8
2.2
4.7
2.0
4.4
2.0
May
5.5
2.1
3.9
2.4
5.4
2.4
4.5
2.3
June
6.8
2.7
4.0
2.6
6.5
2.9
5.0
2.7
July
7.3
3.3
4.4
2.9
7.2
3.5
6.0
3.1
August
8.0
3.9
5.1
3.1
8.1
4.1
6.3
3.5
September
8.0
4.5
5.4
3.4
8.1
4.5
6.4
3.9
Source: Department of Census and Statistics
*CCPI and NCPI Core Inflation (Bace Year 2021=100) – Excluding Volatile Food, Energy and Transport

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4
Headline inflation, as measured by the Y-O-Y 
change in the National Consumer Price Index 
(NCPI, 2021 = 100), increased to 6.5 percent 
in June 2026 from 2.4 percent in January 
2026, having eased to 1.6 percent in February 
before accelerating from March onwards. 
Non-food inflation rose sharply from 1.6 
percent in January 2026 to 9.3 percent in 
June 2026, while food inflation eased slightly 
from 3.4 percent to 3.3 percent over the 
same period. Core inflation, as measured by 
the NCPI (2021 = 100), also increased from 
2.2 percent in January 2026 to 5.0 percent in 
June 2026.
The CBSL expects headline inflation to 
remain above the 5.0 percent target in 
the near term, and then to ease gradually 
and stabilize around the target over the 
medium term, supported by the monetary 
policy tightening in May 2026 and other 
policy measures taken by the Government 
and the CBSL. Nevertheless, amid the 
volatile situation in the Middle East and its 
far-reaching spillovers to both global and 
domestic economic activity, the outlook for 
domestic inflation remains highly uncertain. 
1.3 Money and Credit
The CBSL raised the Overnight Policy Rate 
(OPR) by 100 basis points to 8.75 percent 
in May 2026, from 7.75 percent at the 
beginning of the year, thereby tightening 
monetary policy in view of the elevated 
inflation outlook and the risk of de-anchoring 
inflation 
expectations. Accordingly, 
the 
SDFR and the SLFR, which are linked to the 
OPR with pre-determined margins of ±50 
basis points, increased to 8.25 percent and 
9.25 percent, respectively. As a result, most 
market interest rates increased, including 
short-term rates and lending rates such as 
the Average Weighted Prime Lending Rate 
(AWPR), which rose to 10.34 percent in June 
2026, along with other key deposit and 
lending rates.
Treasury Bill yields across all maturities 
in the primary auctions increased during 
January-June 2026, and longer-term Treasury 
Bond yields also rose in both the primary 
and secondary markets. The 91-day yield 
increased to 10.1 percent by June 24, 2026 up 
by around 240 basis points from end 2025. 
The Statutory Reserve Ratio (SRR) remained 
unchanged at 2.0 percent during the first 
half of 2026. However, with effect from April 
01, 
2026 
the 
CBSL 
introduced 
refinements to the SRR framework to 
strengthen 
reserve 
management 
and 
improve the effectiveness of monetary 
operations. These include phased reductions 
in the recognition of till cash as a reserve 
asset, a two-week reserve maintenance 
period, a minimum daily reserve maintenance 
requirement of 75 percent, and a revised 
penalty mechanism linked to the OPR.
Broad Money Supply (M2b) increased to 
Rs. 16,918.0 billion at the end of June 2026, 
from Rs. 16,069.0 billion at the end of January 
2026, a growth of 5.3 percent, supported 
by the expansion in private sector credit. 
Credit to the private sector increased to 
Rs. 11,281.5 billion at the end of June 2026, 
from Rs. 10,294.8 billion at the end of January 
2026. Credit extended to the private sector 
by licensed commercial banks recorded 
year-on-year growth of around 27.4 percent 
at the end of June 2026. Net Foreign Assets 
increased to Rs. 1,264.9 billion at the end 
of June 2026, from Rs. 1,066.8 billion at the 
beginning of January 2026, supported by the 
Central Bank's purchases of foreign exchange 
from the domestic market.
TABLE 1.2 |  Reserve Money, Broad Money and Private Sector Credit
Rs. Billion
Item
2025
2026
January
February
March
April
May
June
January
February
March
April
May
June
2026 June/
2025 June 
Growth (%)
Reserve Money
1,567.0 1,589.6 1,668.6 
1,677.7 
1,651.1 
1,660.1    1,789.7 1,848.8 1,970.0 1,939.2 
1,917.6 
1,889.1 
13.8
Broad Money
(M2b)
14,439.1 14,543.8 14,777.7 14,931.9 14,965.5 15,175.8 16,069.0 16,276.3 16,585.7 16,660.4 16,761.4 16,918.0 
11.5
Private Sector
Credit
8,151.4 8,256.9 8,414.6 8,501.6 8,634.6 8,856.1 10,294.8 10,439.1  10,697.5 10,798.1 11,036.0 11,281.5 
27.4
Source : Central Bank of Sri Lanka

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TABLE 1.3 |  Movements in the Capital Market
Indicators
2022
2023
2024
2025
End June
2025
2026
All Share Price Index (1985=100)
   8,490 
  10,594 
  15,945 
 22,624 
   18,027 
  22,263 
S & P SL 20 Index
   2,636 
   3,010 
   4,862 
    6,157 
     5,353 
    6,205 
Market Capitalization (Rs. Bn.)
   3,847 
    4,261 
   5,696 
   8,069 
     6,438 
   8,064 
No. of Listed Companies in Trading
      290 
      290 
      284 
     288 
        286 
      290 
Daily Average Turnover (Rs.Mn.)
   2,972 
    1,697 
   2,240 
   7,844 
     4,085 
    4,468 
Foreign Sales (Rs. Mn.)
 36,863 
 37,088 
 58,492 
 95,559 
   37,999 
  56,429 
Foreign Purchases (Rs. Mn)
 67,488 
  41,451 
 48,013 
  56,931 
    26,214 
  22,732 
Net Purchases (Rs. Mn)
30,625
4,363
-10,479
-38,628
-11,785
-33,697
Source: Colombo Stock Exchange 
1.4 Stock Market
Sri Lanka's stock market was considerably 
volatile in the first half of 2026. The All Share 
Price Index (ASPI, 1985 = 100), which reflects 
overall market performance, rose by 23.5 
percent year-on-year to 22,263.3 points at 
the end of June 2026, from 18,026.7 points at 
the end of June 2025. The Standard & Poor's 
Sri Lanka 20 Index (S&P SL20, 2004 = 1,000), 
which represents the most liquid stocks, 
also rose by 15.9 percent year-on-year to 
6,205.1 points at the end of June 2026, from 
5,352.5 points at the end of June 2025. These 
gains were supported by improved investor 
sentiment and selective investor interest in 
listed equities, despite continued market 
volatility and net foreign investor outflows 
during the first half of 2026.
The market capitalization of the Colombo 
Stock Exchange (CSE) increased by 25.3 
percent to Rs. 8,063.7 billion at the end of 
June 2026, from Rs. 6,438.0 billion at the end 
of June 2025. The average daily turnover rose 
by 9.4 percent to Rs. 4,468.2 million in the 
first half of 2026, compared to Rs. 4,085.5 
million in the same period of 2025.
1.5 External Sector Developments
Sri Lanka's external sector came under renewed 
pressure in the first half of 2026. The sharp 
escalation of the conflict in the Middle East 
since late February 2026 triggered a spike in 
global crude oil prices, which gradually raised 
the country's import bill. This was compounded 
by a resurgence in vehicle imports following 
the earlier removal of import restrictions. 
Together, 
these 
factors 
outweighed 
the 
continued resilience of workers' remittances 
and drove the current account into deficit for 
the first time in four years.
In the first half of 2026, workers' remittances 
increased significantly, by 23.2 percent to USD 
4,604.8 million, while tourism earnings declined 
by 11.8 percent to USD 1,511.1 million, against a 
decline of only 1.8 percent in tourist arrivals. The 
sharper fall in earnings relative to arrivals partly 
reflects the Sri Lanka Tourism Development 
Authority’s 
(SLTDA) 
revised 
methodology 
for estimating tourism earnings, including a 
downward revision of average daily tourist 
spending, which limits comparability with the 
2025 figures.  A decline in arrivals, particularly 
from longer-staying European markets amid 
disruptions caused by the Middle East conflict, 
also contributed to the lower earnings.
Earnings from exports increased by 6.3 percent 
to USD 6,903.2 million, while expenditure on 
imports increased by 26.9 percent to USD 
12,392.3 million, widening the trade deficit 
to USD 5,489.1 million. The terms of trade 
deteriorated compared to the corresponding 
period of 2025, as import prices rose faster 
than export prices. Gross official reserves 
stood at USD 6.5 billion at the end of June 2026, 
providing an import cover of 3.2 months.
The current account recorded a deficit of 
USD 245.4 million in the first half of 2026, 
compared to a surplus of USD 1,444.4 million 
in the same period of 2025. This mainly 
reflected the widened trade deficit and a 
moderation in the services account surplus, 
which declined by 22.4 percent to USD 
1,598.7 million.
Net outflows from the Colombo Stock 
Exchange (CSE) amounted to USD 101.1 
million in the first half of 2026, compared to 
a net outflow of USD 39.2 million in the same 
period of 2025. The government securities 
market recorded a net outflow of USD 21.8 
million, compared to a net inflow of USD 90.1

Mid-Year Report 2026 · file page 15 printed page 6

6
million in the same period of 2025. Despite 
these developments, the overall Balance of 
Payments (BoP) recorded a surplus of USD 136 
million in the first half of 2026, compared to a 
surplus of USD 522 million in the same period 
of 2025. The Sri Lankan rupee depreciated by 
7.9 percent against the US dollar on a year-
to-date basis by the end of June 2026.
Exports 
Earnings from exports increased by 6.3 
percent to USD 6,903.2 million in the first half 
of 2026, compared to USD 6,492.1 million in 
the same period of 2025. The increase was 
driven mainly by higher petroleum product 
export earnings amid elevated global fuel 
prices, alongside gains in machinery, food 
TABLE 1.4 | External Trade: January-June 2026
   
 USD Million 
 Category 
2025
2026
% Change
 Exports 
     6,492.1 
      6,903.2 
6.3
   
 Agricultural Exports 
1,427.5
1,450.4
1.6
            Tea 
743.1
700.8
-5.7
            Rubber 
14.7
14.8
0.7
            Coconut 
248.7
288.2
15.9
            Other Agricultural Products 
421.0
446.6
6.1
   
 Industrial Exports 
5,044.5
5,424.6
7.5
            Food, Beverages & Tobacco 
407.6
461.0
13.1
            Textile and Garments 
2,605.8
2,451.0
-5.9
            Petroleum Products 
465.3
720.8
54.9
            Rubber Products 
453.1
477.5
5.4
            Machinery & Mechanical Appliances 
225.4
321.9
42.8
            Other Industrial Products 
887.3
992.4
11.8
   
  Mineral Exports 
10.1
18.2
79.5
  Unclassified Exports 
9.9
10.1
1.4
 Imports 
9,762.2
12,392.3
26.9
   
 Consumer Goods 
2,315.5
3,036.5
31.1
            Food and Beverages   
1,094.5
1,113.8
1.8
            Other Consumer Goods 
1,221.0
1,922.7
57.5
   
 Intermediate Goods 
5,575.6
7,058.7
26.6
            Petroleum 
1,995.7
3,168.4
58.8
            Fertilizer 
94.1
109.5
16.4
            Textiles and Textiles Articles 
1,336.4
1,303.3
-2.5
            Chemical Products 
488.6
575.5
17.8
            Plastic & Articles there of  
298.3
340.6
14.2
            Other Intermediate Goods 
1,364.5
1,561.4
14.4
   
 Investment Goods 
1,862.6
2,284.0
22.6
            Machinery and Equipment 
1,208.0
1,422.8
17.8
            Transport Equipment 
173.7
364.7
110.0
            Building Material 
479.1
493.9
3.1
            Other Investment Goods 
1.9
2.6
38.1
 Unclassified Imports 
8.5
13.1
54.3
 Trade Balance 
-3,270.1
-5,489.1
Source: Central Bank of Sri Lanka
and beverages, and agricultural exports, 
which more than offset declines in textiles 
and garments and tea. Industrial exports 
accounted for 78.6 percent of total export 
earnings, while agricultural and mineral 
exports accounted for 21.0 percent and 0.2 
percent, respectively.
Earnings from industrial exports increased by 
7.5 percent to USD 5,424.6 million in the first 
half of 2026, from USD 5,044.5 million in the 
same period of 2025. This was driven mainly 
by petroleum products, which rose by 54.9 
percent to USD 720.8 million; machinery and 
mechanical appliances, which increased by 
42.8 percent to USD 321.9 million; and food, 
beverages and tobacco, which grew by 
13.1 percent to USD 461.0 million. However,

Mid-Year Report 2026 · file page 16 printed page 7

7
earnings from textiles and garments, the 
largest industrial export category, declined 
by 5.9 percent to USD 2,451.0 million in the 
first half of 2026, from USD 2,605.8 million 
in the same period of 2025, amid subdued 
external demand.
Earnings from agricultural exports increased 
by 1.6 percent to USD 1,450.4 million in the 
first half of 2026, from USD 1,427.5 million in 
the same period of 2025, as higher earnings 
from coconut and seafood offset the decline 
in tea earnings. Coconut earnings increased 
notably, by 15.9 percent to USD 288.2 million, 
while seafood earnings grew by 17.6 percent 
to USD 122.5 million. However, tea earnings, 
the largest agricultural export category, 
declined by 5.7 percent to USD 700.8 million, 
from USD 743.1 million in the same period 
of 2025, owing to lower export volumes 
and moderating auction prices. Meanwhile, 
mineral export earnings increased notably, 
by 79.5 percent to USD 18.2 million, while 
unclassified export earnings increased by 1.4 
percent to USD 10.1 million.
Imports 
Expenditure on imports increased by 26.9 
percent to USD 12,392.3 million in the first 
half of 2026, compared to USD 9,762.2 million 
in the same period of 2025. The increase was 
due to higher import expenditure across all 
major categories, driven mainly by elevated 
global fuel prices amid the conflict in the 
Middle East and a significant rebound in 
personal 
vehicle 
imports. 
Intermediate 
goods, consumer goods and investment 
goods accounted for 57.0 percent, 24.5 
percent and 18.4 percent of total import 
expenditure, respectively.
Import expenditure on intermediate goods 
increased by 26.6 percent to USD 7,058.7 
million, from USD 5,575.6 million in the same 
period of 2025, mainly due to a significant 
increase in fuel import expenditure. Fuel 
imports rose by 58.8 percent to USD 
3,168.4 million, driven by increases in 
refined petroleum imports 78.7 percent to 
USD 2,538.6 million, crude oil imports by 
7.5 percent to USD 479.5 million, and coal 
imports by 16.1 percent to USD 150.4 million. 
However, monthly fuel import expenditure 
moderated from USD 886 million in April 
2026 to USD 536 million in May 2026, and 
further to USD 465 million in June 2026. 
Meanwhile, import expenditure on textiles 
and textile articles declined by 2.5 percent 
to USD 1,303.3 million. However, chemical 
product imports increased by 17.8 percent to 
USD 575.5 million.
Import expenditure on consumer goods 
increased sharply, by 31.1 percent to USD 
3,036.5 million, from USD 2,315.5 million in 
the same period of 2025, driven primarily by 
non-food consumer goods, which rose by 
57.5 percent to USD 1,922.7 million. This was 
mainly attributable to a substantial rebound 
in personal vehicle imports, which increased 
by 169.7 percent to USD 972.2 million, from 
USD 360.5 million in the same period of 2025. 
Import expenditure on food and beverages 
increased marginally, by 1.8 percent to USD 
1,113.8 million.
Import expenditure on investment goods 
increased by 22.6 percent to USD 2,284.0 
million, from USD 1,862.6 million in the same 
period of 2025, mainly due to a 110.0 percent 
increase in transport equipment imports 
to USD 364.7 million, of which commercial 
vehicle imports rose by 146.0 percent to 
USD 281.6 million. Import expenditure on 
machinery and equipment increased by 
17.8 percent to USD 1,422.8 million, while 
expenditure on building materials increased 
by 3.1 percent to USD 493.9 million.
Workers’ Remittances and Earnings from 
Tourism
Workers' remittances grew by 23.2 percent 
to USD 4,604.8 million in the first half of 2026, 
compared to USD 3,738.0 million in the same 
period of 2025, partly reflecting remittance-
linked inflows received following Cyclone 
Ditwah, 
which 
were 
directed 
toward 
disaster relief and rebuilding efforts. Tourist 
arrivals declined marginally, by 1.8 percent 
to 1,146,573 persons, compared to 1,168,044 
persons in the same period of 2025, while 
earnings from tourism declined by 11.8 
percent to USD 1,511.1 million, compared to 
USD 1,712.6 million. The sharper decline in 
earnings relative to arrivals partly reflects the 
revised methodology adopted by the SLTDA 
for estimating tourism earnings, together 
with a decline in arrivals from longer-staying

Mid-Year Report 2026 · file page 17 printed page 8

8
European markets, amid the conflict in the 
Middle East. India, the United Kingdom, the 
Russian Federation, China, Germany and 
Australia were the leading source markets for 
tourist arrivals during the first half of 2026.
1.6 Global Economic Perspectives1
Global economic conditions remained more 
resilient than expected in 2026, despite 
the continuing conflict in the Middle East 
and ongoing trade tensions. Higher energy 
prices and conflict-related supply disruptions 
weighed on global economic activity, while 
strong investment in artificial intelligence (AI) 
and technology-related exports provided an 
important offset. As a result, growth became 
increasingly uneven across countries, with 
economies linked to the technology value 
chain or benefiting from higher energy prices 
performing better than energy-importing 
economies. 
1  Based on World Economic Outlook (October 2026, 
IMF)
TABLE 1.5 | A Snapshot of the World – 2025
2025
Country
GDP Growth 
(Annual percent 
change)(a)
Inflation 
(Percent)(a)
Unemployment 
(Percent)(b)
Fiscal Balance 
(Percent of GDP)(b)
Gross Debt 
(Percent of GDP)(b)
Argentina
4.5
41.9
7.4
-1.1
80.3
Australia
2.0
2.8
4.2
-2.6
51.0
Brazil
2.3
5.0
6.0
-3.0
93.3
Canada
1.9
2.1
6.9
-0.9
113.5
Chile
2.5
4.2
8.5
-2.3
41.8
China
5.0
0.0
5.1
3.7
99.2
France
0.9
0.9
7.6
-0.4
116.0
Germany 
0.2
2.3
3.8
4.4
62.9
Greece
2.1
2.9
8.9
-5.7
145.7
India
7.8
2.0
4.9
-0.9
84.1
Indonesia
5.1
1.9
4.9
-0.1
41.0
Italy 
0.5
1.6
6.1
1.2
137.1
Japan
1.2
3.2
2.5
4.8
206.5
Korea
1.1
2.1
2.8
6.6
52.3
Malaysia
5.2
1.4
3.0
1.6
70.7
Mexico
0.5
3.8
2.6
-0.4
61.8
Russia
1.0
8.7
2.2
1.6
17.2
Singapore 
5.0
0.9
2.0
16.7
171.3
South Africa
1.1
3.2
32.4
-0.5
78.6
Spain
2.6
2.7
10.5
2.9
100.4
Sri Lanka
5.0
-0.5
3.9
-2.3
91.6
Thailand
2.4
-0.1
1.0
3.1
64.7
United Kingdom
1.2
3.4
4.9
-3.1
102.3
United States
2.3
2.7
4.3
-3.6
123.9
Vietnam
8.0
3.3
2.2
6.7
30.3
Venezuela
9.0
252.0 
…
2.6
308.7
Source: (a)World Economic Outlook, IMF, October 2026, (b) World Economic Outlook, IMF, April 2026, Fiscal 
Monitor, IMF, April 2026, Annual Report 2025- Ministry of Finance
… Not available
Global headline inflation rose again in August 
2026, as energy prices increased after the 
temporary halt in the conflict in the Middle 
East ended. Oil prices nearly doubled in the 
early months of the conflict, before settling 
at levels around 20 to 40 percent above 
pre-conflict levels. Global trade growth is 
expected to slow from the pace recorded in 
2025, mainly due to tariffs and the gradual 
adjustment of trade linkages, even as 
technology-related trade flows continued to 
grow strongly. Financial conditions remained 
broadly 
accommodative 
by 
historical 
standards, though this mainly reflected 
strong equity valuations, while government 
bond yields rose in many economies amid 
renewed inflation and concerns over fiscal 
sustainability.

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9
Global Growth
Global growth was estimated at 3.5 percent 
in 2025 and is projected to moderate to 
3.1 percent in 2026. Growth in advanced 
economies is projected to rise slightly 
to 2.1 percent in 2026, as higher energy 
prices weigh on net energy importers, 
unless they are supported by technology-
related activity. The United States (US) is 
expected to grow by 2.3 percent, driven 
by robust private consumption, supportive 
fiscal 
policy, 
accommodative 
financial 
conditions 
and 
continued 
technology-
related investment, with only a limited direct 
impact from the conflict as the country is a 
net energy exporter. Meanwhile, growth in 
the Euro area is projected at 1.1 percent in 
2026, as elevated energy costs and subdued 
consumer sentiment continue to weigh 
on activity. Japan's growth is projected to 
moderate to 0.7 percent in 2026, as higher 
energy prices weigh on activity, only partly 
offset by fiscal support measures. 
Growth in emerging market and developing 
economies is expected to slow to 3.7 
percent in 2026, from 4.5 percent in 2025. 
Small island developing states are expected 
to experience slower growth, driven by 
higher energy costs and weaker tourism and 
remittances. China's growth is projected to 
slow to 4.5 percent in 2026, as higher global 
oil prices, along with prolonged uncertainty 
and structural headwinds, weigh on activity. 
India is projected to grow by 7.0 percent in 
2026, remaining among the fastest-growing 
major economies, driven by strong domestic 
demand and services activity. Malaysia, 
Thailand and Vietnam are projected to 
grow by 5.2 percent, 2.1 percent and 8.4 
percent, respectively, in 2026, benefiting 
from their close integration into the global 
technology value chain.  Global growth is 
expected to recover to 3.4 percent in 2027, 
on the assumption that the reopening of the 
Strait of Hormuz begins in March 2027 and 
conditions return broadly to pre-conflict 
levels by October 2027. 
Inflation
Inflationary pressures re-emerged in 2026, 
pausing the steady decline in global inflation, 
mainly due to the supply shock caused 
by the conflict in the Middle East. Global 
headline inflation is projected to rise to 4.7 
percent in 2026, from 4.1 percent in 2025, 
driven mainly by higher energy and food 
prices. Core inflation remained moderate 
in most countries, although prices of some 
core goods in advanced economies started 
to reflect the rapidly rising cost of memory 
chips, while core inflation in the US increased 
due to a rebound in travel services prices. 
Inflation is expected to remain uneven across 
countries, owing to differences in exchange 
rate pass-through, the persistence of services 
inflation, labour market conditions, policy 
credibility and administered pricing systems. 
Core inflation is projected to return to 2 
percent only gradually in major economies, 
with Japan and the United Kingdom reaching 
it by end-2027, and the euro area and the 
United States by mid-2028.
Global headline inflation is projected to ease 
to 4.1 percent in 2027 from 4.7 percent in 
2026, contingent on the reopening of the 
Strait of Hormuz proceeding as assumed. 
Inflation is projected at 3.1 percent in 
advanced economies and 5.7 percent in 
emerging market and developing economies 
in 2026. Risks to the inflation outlook include 
a prolonged stalemate or further escalation of 
conflicts in the Middle East or Ukraine, which 
could keep commodity prices higher and 
more volatile for longer, as well as extreme 
weather events linked to the ongoing El Niño 
episode, which could push up food prices.
Commodity Markets
Commodity prices rose sharply in 2026, 
reversing the decline in oil prices recorded 
in 2025. The average petroleum spot price is 
projected at around USD 96 per barrel for the 
year, an increase of 41.3 percent over 2025, 
reflecting disruptions to flows through the 
Strait of Hormuz that were only partly offset 
by higher production outside the Gulf and 
drawdowns in global inventories. Oil prices 
peaked at USD 126 per barrel in late March 
2026 and briefly fell to USD 68 per barrel 
following a memorandum of understanding 
between Iran and the United States in mid-
June, while prices of refined petroleum 
products remained 70 to 95 percent above 
pre-conflict levels. Natural gas prices in 
Europe are projected at USD 20 per million 
British thermal units in 2026, an increase of 
48 percent over 2025, reflecting damage to

Mid-Year Report 2026 · file page 19 printed page 10

10
TABLE 1.6 | International Commodity Prices
Item
Unit
Actual 
Projection
2024
2025
2026
2027
Energy
         Coal, Australia
$/MT
       136.1 
       108.4 
       130.0 
       115.0 
         Crude oil, Brent
$/bbl
       80.7 
         69.0 
        86.0 
        70.0 
         Natural gas, US
$/MMBTU
         2.2 
           3.5 
          3.8 
          4.0 
Non-energy
    Agriculture
         Beverages
             Cocoa 
$/kg
       7.33 
         7.80 
        3.80 
        4.20 
             Coffee, robusta
$/kg
        4.41 
         4.86 
        4.00 
        3.90 
             Tea
$/kg
       3.04 
          2.91 
        2.85 
        3.00 
        Food
             Fats and Oils
                  Palm oil
$/MT
        963 
       1,007 
       1,089 
       1,096 
                  Soybean meal
$/MT
        442 
          366 
         359 
         363 
                  Soybeans
$/MT
        462 
           414 
          441 
         446 
             Grains
                  Maize
$/MT
         191 
          203 
          211 
          214 
                  Rice
$/MT
        588 
          408 
          401 
          413 
                   Wheat
$/MT
        269 
          243 
         253 
         260 
            Other food
                Sugar
$/kg
0.45
0.37
0.35
0.34
       Raw Materials
            Cotton
$/kg
1.91
1.71
1.65
1.75
             Rubber
$/kg
1.75
1.77
1.90
1.95
             Sawn wood
$/cum
697
718
725
730
       Metals and Minerals
             Aluminium
$/MT
      2,419 
       2,632 
      3,200 
      3,000 
             Copper 
$/MT
      9,142 
       9,947 
     12,000 
     11,000 
              Nickel
$/MT
     16,814 
       15,162 
     17,000 
     17,500 
Source: World Bank Pink Sheet – June 2026
Qatar's energy infrastructure and low gas 
stocks in Europe, while prices in the United 
States remained insulated from the conflict.
Food prices are projected to rise by 5 
percent in 2026, reflecting elevated energy 
and fertilizer costs as well as more expensive 
transport and insurance. Fertilizer prices are 
projected to rise by 10 percent in 2026, while 
wheat prices rose by 22.7 percent between 
March and August 2026 amid disruptions 
to Black Sea grain flows and heat waves in 
Europe. Further increases in energy and food 
prices could have severe effects on poverty 
and food security, especially in the most 
vulnerable low-income economies.
1.7 Global Trade
World trade growth is expected to slow 
to 4.6 percent in 2026 from 5.0 percent in 
2025. This slowdown reflects the impact of 
tariffs and the gradual adjustment of trade 
linkages and production chains through 
trade reconfiguration and the substitution 
of suppliers, although technology-related 
trade is expected to remain strong. Export 
growth of advanced economies is projected 
to increase to 5.1 percent in 2026 from 3.6 
percent in 2025, while export growth of 
emerging market and developing economies 
is projected to slow sharply to 3.6 percent 
from 7.1 percent, amid disruptions to energy 
output and transport in the Middle East.
Technology-related 
trade 
continued 
to 
expand rapidly. Net trade in AI-related 
hardware increased sharply as a share of 
world GDP, driven mainly by higher prices 
rather than higher volumes. The four major 
net exporters of AI-related hardware, namely 
Korea, Malaysia, Thailand and Taiwan Province 
of China, saw their growth prospects revised 
upward, with Korea's growth projected to rise 
to 3.3 percent in 2026, supported by strong

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11
international demand for semiconductors. 
Cross-border trade, however, continued 
to face challenges from tariffs, as both the 
effective US tariff rate and the tariffs imposed 
by other countries on US imports are slightly 
higher than assumed in April 2026. Firms 
have redirected a large share of trade toward 
alternative destinations, which has reduced 
the short-term damage from higher trade 
barriers, but resulting duplication of activities 
and higher costs may lower efficiency in the 
long run.
In the period ahead, world trade volume 
growth is projected to stabilize at 4.7 
percent in 2027, as conditions in the Strait 
of Hormuz are assumed to normalize 
progressively 
and 
trade 
linkages 
and 
production chains adjust further. However, 
trade tensions could rise again, especially if 
they become linked to ongoing conflicts or 
if trade rerouting becomes more disruptive. 
Prolonged disruptions to energy markets 
and strategic supply chains, or unbalanced 
trade, could lead more countries to raise 
tariffs or impose other trade restrictions. 
Restrictions on energy, critical minerals and 
other key production inputs could cause 
supply bottlenecks and higher prices. If 
countries retaliate, these costs could grow 
further. On the other hand, new regional and 
bilateral trade agreements could lower trade 
barriers and support global activity.
1.8 Monetary and Financial Sector
Monetary policy remained cautious during 
2026, as central banks weighed domestic 
growth momentum against the possibility 
of a lasting inflationary impact from the 
conflict. Monetary policy is expected to 
provide less support than assumed in April, 
as inflationary pressures have become more 
evident while economic activity has slowed 
only modestly. Policy rates in the euro area 
and the US are projected to increase in 
real terms, while the policy rate in Japan 
is expected to gradually move toward a 
neutral level. The short-lived ceasefire in the 
Middle East has been replaced by a low-
intensity conflict that has expanded to the 
Red Sea, keeping energy prices volatile. In 
this context, the IMF emphasizes that central 
banks should avoid reacting too strongly to 
short-term movements in headline inflation 
driven by energy prices, but to respond if 
higher inflation starts to feed into inflation 
expectations or wage setting.
Financial markets largely remained calm 
during 
the 
period, 
despite 
volatility 
driven by the conflict and developments 
related to artificial intelligence (AI). Global 
financial 
conditions 
remained 
relatively 
accommodative 
in 
historical 
terms, 
supported by strong corporate earnings 
and high equity valuations, particularly in 
technology stocks, which offset tighter 
conditions elsewhere. Government bond 
yields rose in many economies due to a 
resurgence of inflation, the expected path of 
short-term policy rates and concerns about 
fiscal sustainability, with benchmark interest 
rates in advanced economies climbing to 
multidecade highs and pushing up borrowing 
costs for emerging markets. Exchange rates 
were highly volatile, particularly in Asia, 
leading authorities to intervene, including 
through a joint operation by Japan and the 
US. Meanwhile, gold prices declined by 9.1 
percent between March and August 2026, 
as higher interest rates increased the cost of 
holding non-yielding assets.
Although 
financial 
conditions 
remained 
accommodative by historical standards, 
financial stability risks persisted. These 
centred on stretched equity valuations 
and 
the 
increasing 
concentration 
of 
equity markets in AI-related stocks, and 
the 
possibility 
of 
a 
sharp 
correction 
should expectations regarding AI-related 
profitability and productivity gains be 
revised downward, as shown by recent bouts 
of volatility in technology stocks in Korea 
and the United States. They also centred on 
elevated public debt and large refinancing 
needs in several major economies, which 
leave sovereign markets exposed to sudden 
changes in financial conditions. Public debt 
is projected to rise from 108 percent of GDP 
in 2025 to 115 percent of GDP in 2031 in 
advanced economies, and from 74 percent 
to 84 percent of GDP in emerging market and 
developing economies. Managing these risks 
depends on rebuilding fiscal space through 
credible fiscal adjustment plans, prudent 
debt management and financial regulation, 
alongside 
stronger 
safeguards 
against 
cyberattacks, including those facilitated by 
AI, on critical infrastructure and financial 
services.

Mid-Year Report 2026 · file page 21 printed page 12

12
CHAPTER 2
Fiscal Developments
2.1 Overview 
Fiscal performance continued to strengthen 
during the first half of 2026, supported by 
sustained revenue mobilization, ongoing 
revenue-based 
fiscal 
consolidation, 
strengthened 
anti-corruption 
measures, 
and 
greater 
macroeconomic 
stability. 
The 
revenue-based 
fiscal 
adjustments 
undertaken since 2022 have contributed to a 
sustained recovery of government revenue, 
with the tax-to-GDP ratio rising from 7.3 
percent in 2022 to 15.4 percent in 2025. 
Building on these gains, the Government 
remains committed to sustaining revenue 
mobilization and improving expenditure 
management to support fiscal sustainability, 
equitable economic growth, and post-
disaster recovery. To this end, continued 
efforts are being directed towards improving 
expenditure efficiency, accelerating the 
execution of capital expenditure on priority 
projects, supporting recovery following 
Cyclone Ditwah, increasing the contribution 
of direct taxation, advancing the digitalization 
of tax administration, and strengthening the 
targeting of social safety net programmes.
Reflecting the continued fiscal consolidation 
efforts, the primary surplus increased to 
Rs. 1,244.1 billion in the first half of 2026, 
compared to Rs. 859.0 billion recorded in 
the same period of 2025, mainly supported 
by higher revenue collection and lower 
execution of capital expenditure. The primary 
surplus substantially exceeded the end-June 
2026 Quantitative Performance Criterion 
(QPC) of Rs. 72 billion set for the first half 
of 2026 under the IMF-EFF programme. The 
overall budget balance also turned into a 
surplus of Rs. 9.5 billion in the first half of 
2026, from a deficit of Rs. 405.6 billion in the 
same period of 2025.
TABLE 2.1 | Summary of the Budget: January-June 2026
Rs. Million
 Item 
2025
2026 (Provisional)
 Revenue and Grants 
      2,325,104 
        2,956,003 
          Revenue 
       2,321,719 
         2,954,189 
                Tax Revenue 
       2,152,087 
         2,710,552 
                Non Tax Revenue 
          169,632 
            243,637 
Grants 
             3,385 
                1,813 
 Expenditure 
      2,730,707 
        2,946,494 
          Recurrent  
      2,506,828 
        2,669,889 
                Interest Payments 
        1,264,591 
         1,234,580 
                Other 
       1,242,237 
         1,435,309 
          Public Investment 
         228,064 
           280,071 
          Other 
-4,185
-3,467
 Current Account Surplus(+)/Deficit(-) 
-185,109
           284,301 
 Overall Budget Surplus(+)/Deficit(-) 
-405,603
               9,509 
 Financing 
         405,603 
             -9,509
           Foreign Financing  
-120,042
             32,559 
                Borrowing 
          137,715 
           304,535 
                Repayments 
-257,757
-271,976
          Domestic Financing 
         525,645 
            -42,068
                Borrowing 
       1,312,750 
           835,707 
                Repayments 
-787,104
-877,774
Source:  Department of Fiscal Policy

Mid-Year Report 2026 · file page 22 printed page 13

13
In the first half of 2026, total government 
revenue and grants increased by 27.1 percent 
to Rs. 2,956.0 billion, while total revenue 
excluding grants increased by 27.2 percent 
to Rs. 2,954.2 billion, achieving 56.1 percent 
of the annual estimate by end June 2026. 
The strong revenue performance was mainly 
driven by the higher tax revenue, which 
increased by 25.9 percent to Rs. 2,710.6 
billion, supported by higher collections from 
income taxes, taxes on goods and services 
and taxes on external trade. Sri Lanka Customs 
and the Inland Revenue Department were 
the main contributors to the increase in tax 
revenue, reflecting stronger collections from 
both import-related and domestic taxes. 
Non-tax revenue also increased significantly 
by 43.6 percent to Rs. 243.6 billion, while 
grants declined by 46.4 percent to Rs. 1.8 
billion.
Income tax revenue increased by 16.3 
percent to Rs. 568.4 billion, supported by 
higher collections from corporate and non-
corporate income taxes and withholding 
taxes. Taxes on goods and services increased 
by 29.6 percent to Rs. 1,769.0 billion, mainly 
reflecting higher Value Added Tax (VAT), 
excise duty and Social Security Contribution 
Levy 
(SSCL) 
collections. 
VAT 
revenue 
increased by 25.4 percent to Rs. 987.6 billion, 
supported by higher domestic and import-
related collections, as well as improvements 
in tax administration and the continued 
digitalization of tax administration aimed at 
strengthening compliance and collection 
efficiency. Revenue from taxes on external 
trade increased by 25.1 percent to Rs. 373.2 
billion, mainly due to increase of the value of 
imports and higher import duties on motor 
vehicles.
Total government expenditure increased by 
7.9  percent to Rs. 2,946.5 billion, while 
recurrent expenditure increased by 6.5 
percent to Rs. 2,669.9 billion in the first six 
months of 2026. The increase in recurrent 
expenditure was mainly due to the impact 
of public sector salary revisions and higher 
expenditure 
on 
welfare 
programmes, 
retirement 
benefits 
and 
transfers. 
Expenditure on goods and services declined 
by 5.8 percent, reflecting tighter controls 
on operational expenditure, while interest 
payments also declined by 2.4 percent. 
Salaries and wages increased by 12.0 
percent to Rs. 621.7 billion, while subsidies 
and transfers increased by 25.6 percent to 
Rs. 666.3 billion.
Capital 
expenditure 
and 
net 
lending 
increased by 23.6 percent to Rs. 276.6 
billion, while public investment increased by 
22.8 percent to Rs. 280.1 billion, compared 
to Rs. 228.1 billion in the same period of 
2025, reflecting continued progress in 
development activities.
The improved fiscal position was also 
reflected in the Government's financing 
position. Total financing recorded a negative 
Rs. 9.5 billion during the first half of 2026, 
consistent with the overall budget surplus. 
Net foreign financing amounted to Rs. 32.6 
billion, comprising gross foreign borrowings 
of Rs. 304.5 billion and repayments of Rs. 
272.0 billion. Meanwhile, net domestic 
financing recorded a negative Rs. 42.1 billion, 
compared to positive domestic financing of 
Rs. 525.6 billion in the same period of 2025. 
These developments indicate a reduced 
reliance on domestic financing during the 
period, in line with the improved fiscal 
position.
Overall, the fiscal developments during the 
first half of 2026 indicate continued progress 
in 
fiscal 
consolidation, 
supported 
by 
stronger revenue performance, expenditure 
management 
and 
improved 
financing 
TABLE 2.2 | Estimated and Actual Revenue and Expenditure: January-June 2026
Rs. Billion
Item
Estimated 
(Annual)
Actual 
(Provisional)
Achievement  
(%)
Total Revenue
        5,270 
               2,954 
                  56.1 
Tax Revenue
        4,910 
                2,711 
                 55.2 
Non – Tax Revenue
           360 
                  244 
                 67.7 
Total Expenditure
        7,557 
               2,946 
                 39.0 
Recurrent Expenditure
        5,838 
               2,670 
                 45.7 
Capital Expenditure and Net Lending
         1,719 
                  277 
                  16.1 
Source:  Department of Fiscal Policy

Mid-Year Report 2026 · file page 23 printed page 14

14
conditions, while maintaining support for 
priority public investment and targeted 
social protection.
2.2 Government Revenue
 
Total government revenue including grants 
increased by 27.1 percent to Rs. 2,956.0 
billion in the first half of 2026, compared to 
Rs. 2,325.1 billion in the same period of 2025 
mainly due to the increase in tax revenue by 
25.9 percent to Rs. 2,710.6 billion in the first 
half of 2026, compared to Rs. 2,152.1 billion 
recorded in the same period of 2025. 
The surge in tax revenue was led by the 
increase in revenue from: 
1. Excise Duty on motor vehicles by 106.2 
percent or Rs. 137.2 billion due to 
increase of motor vehicle imports by 
256 percent to 313,480 for the period 
from January to June in 2026 with the 
relaxation of import of all type of motor 
vehicles with effect from February 
2025; 
2. VAT expanded by 25.4 percent or 200.3 
billion driven by increase of VAT on 
imports by 25.3 percent to Rs.  443.7 
billion due to relaxation of import of all 
type of motor vehicles with effect from 
February 2025 together with imposition 
of VAT on imported fabric with effect 
from April 01, 2026 and increase of VAT 
on domestic by 25.5 percent to Rs. 
543.9 billion resulted from expansion of 
domestic activities and administrative 
measures reflecting increase of VAT 
registrations including VAT on financial 
services by 34.2 percent to 37,027 files 
in the first half of 2026, compared to 
the first half of 2025;
3. Customs Import Duty (CID) by 63.6 
percent or Rs. 59.8 billion mainly due 
to application of CID on motor vehicles 
together imposition of 50 percent 
Surcharge  on applicable CID on motor 
vehicles and increase of import value of 
goods by 26.9 percent to USD 12,392.3 
million in the respective period; 
4. Income Taxes by 16.3 percent or Rs. 
79.9 billion mainly due to increase of 
corporate income tax by 21.7 percent 
to Rs. 314.5 billion reflecting increase in 
tax rate to 45 percent from 40 percent 
on the liquor, tobacco and betting and 
gaming industries and introduction of 
15 percent tax on the gains and profit 
earned or derived from any foreign 
source with effect from April 01, 2025. 
Revenue from withholding tax (WHT) 
increased by 21.0 percent to Rs. 104.2 
billion reflecting the increase of WHT 
on interest rate to 10 percent from 
5 percent with effect from April 01, 
2025. Meanwhile, improvements in 
tax administration, reflected in a 12 
percent increase in total income tax file 
registrations to 1,406,497 as at end-June 
2026, compared to end-June 2025, also 
contributed to this revenue growth;
5. SCL by 7.2 percent or Rs. 5.6 billion 
driven by the rate increases for 
importation of Potatoes and Onions 
together with  measures to facilitate 
rice imports; 
6. SSCL by 21.5 percent or Rs. 30.5 billion 
driven by expansion of domestic 
and external activities together with 
improved tax administration measures 
reflecting growth of number of SSCL 
file registrations by 31.2 percent to 
18,332 in the first half of 2026. 
7. Excise Duty on liquor by 27.1 percent or 
Rs. 29.3 billion mainly due to increase 
of liquor production by 13.3 percent to 
19.7 million absolute litres during first 
half of 2026 
8. PAL by 10.6 percent or Rs. 9.0 billion 
due to the increase in imports. 
The increase of non-tax revenue by 43.6 
percent or Rs. 74.0 billion in the first half 
of 2026 also contributed to the escalation 
in revenue. This was mainly led by transfer 
of Central Bank Profit of Rs. 42.1 billion and 
the increase in revenue from fines, fees 
and charges by Rs. 20.3 billion. Meanwhile, 
revenue from interest income and social 
security 
contributions 
also 
positively 
contributed to the escalation of this non-tax 
revenue.

Mid-Year Report 2026 · file page 24 printed page 15

15
Tax Revenue 
The government tax revenue increased to 
Rs. 2,710.6 billion, accounting 91.8 percent of 
government total revenue in the first half of 
2026. Benefiting from the higher collection 
of VAT, Excise Duty and external trade taxes, 
direct to indirect tax ratio declined to 21:79 
percent in the first six months of 2026, 
compared to 23:77 percent in the same 
period of 2025.  By mid-2026, tax revenue 
collection had reached 55.2 percent of the 
annual estimate of Rs. 4,910.0 billion.
Tax revenue based on domestic consumption 
increased by 24.2 percent, reaching Rs. 
869.6 billion during the first six months 
of 2026, compared to Rs. 700.0 billion 
recorded during the corresponding period 
of 2025. Meanwhile, revenue from import-
based taxes increased by 32.3 percent to 
TABLE 2.3 | Annual Estimate and Actual Tax Revenue: January-June 2026
Rs. Billion
Item
Annual Estimate
Actual 
(Provisional)
Department of Inland Revenue
Tax on Income 
                 1,210 
                  568 
VAT – Domestic 
                   937 
                  544 
SSCL -Domestic
                   236 
                  125 
IRD Other
                     18 
                    10 
Sub Total
                2,401 
               1,248 
Sri Lanka Customs 
Import Duty 
                   235 
                  154 
VAT – Imports 
                   875 
                  444 
SSCL -Import
                     97 
                    47 
Ports and Airports Development Levy
                   190 
                    94 
Import/Export Cess 
                    90 
                    42 
Special Commodity Levy 
                   129 
                   83 
Excise Special Provisions
                   589 
                  424 
     Cigarettes
                   105 
                    57 
     Petroleum
                   205 
                    96 
     Motor Vehicles & Other
                   279 
                  272 
Other 
                       1 
                     2 
Sub Total
               2,206 
               1,290 
Department of Excise
Liquor/Tobacco
                   245 
                  138 
Sub Total
                  245 
                  138 
Other
Telecommunication Levy
                     17 
                     7 
License Tax & Other
                     41 
                   28 
Sub Total
                    58 
                    35 
Total Tax Revenue
                4,910 
                2,711 
Source : Department of Fiscal Policy
Income Tax
19%
VAT
34%
Excise Duty
19%
Customs Duty
5%
PAL
3%
SCL
3%
CESS
1%
SSCL
6%
Other
2%
Non Tax 
Revenue
8%
FIGURE 2.1 | Composition of Government Revenue: 
January-June 2026
Source: Department of Fiscal Policy

Mid-Year Report 2026 · file page 25 printed page 16

16
Rs. 1,226.0 billion, compared to Rs. 927.0 
billion recorded in the first six months of 
2025. 
Income Tax
Revenue from income taxes rose by 16.3 
percent to Rs. 568.4 billion in the first six 
months of 2026, from Rs. 488.5 billion in the 
same period of 2025. The increase was driven 
mainly by higher Corporate Income Tax (CIT) 
and Withholding Tax (WHT) collections.
Revenue from CIT rose significantly, by 
21.7 percent, to Rs. 314.5 billion in the first 
six months of 2026, compared to Rs. 258.3 
billion in the corresponding period of 2025. 
The increase was mainly attributable to the 
expansion of domestic economic activities, 
the increase in the CIT rate applicable to 
the liquor, tobacco, and betting and gaming 
industries from 40 percent to 45 percent, and 
the introduction of a 15 percent tax on gains 
and profits earned or derived from foreign 
sources effective April 01, 2025. In addition, 
a broader tax base, supported by improved 
tax administration efforts, contributed to the 
growth in CIT revenue.
Revenue 
from 
Pay-As-You-Earn 
(PAYE)/
Advance 
Personal 
Income 
Tax 
(APIT) 
increased by 4.5 percent to Rs. 118.4 billion 
in the first six months of 2026. This reflected 
TABLE 2.4 | Performance of Government Revenue: January-June 2026
Rs. Million
Item
2025
2026 
(Provisional)
Growth %
Tax Revenue
    2,152,087         2,710,552 
25.9
Income Tax
      488,506            568,356 
16.3
Domestic Consumption Based Tax
       699,990            869,643 
24.2
         Value Added Tax
       433,364             543,931 
25.5
         Social Security Contribution Levy
        108,561            125,058 
15.2
         Excise Duty
       158,023            200,627 
27.0
         Nation Building Tax
               43 
                   27 
-36.1
Import Based Tax 
       926,988          1,226,015 
32.3
         Customs Duty
         93,952 
            153,712 
63.6
         Value Added Tax
       353,967            443,690 
25.3
         Nation Building Tax
             405 
                     2 
-99.6
         Ports & Airports Development Levy 
         85,431              94,455 
10.6
         Special Commodity Levy
         77,579 
             83,163 
7.2
         Social Security Contribution Levy
         33,061 
             47,046 
42.3
         Excise Duty
        241,136            362,057 
50.1
         Cess
         41,456 
             41,890 
1.0
License Taxes and Other
         36,604              46,537 
27.1
Non Tax Revenue
       169,632            243,637 
43.6
Total Revenue
     2,321,719         2,954,189 
27.2
Source : Department of Fiscal Policy
the combined effects of the increase in the 
annual tax-free threshold from Rs. 1.2 million 
to Rs. 1.8 million, the structural changes to tax 
rates effective April 1, 2025, and the increase 
in salaries and wages over the period.
TABLE 2.5 | Revenue from Income Tax: January-June 2026
Rs. Million
Tax Base
2025
2026
(Provisional) Change %
Corporate and Non 
Corporate
289,055 
345,751 
19.6
PAYE/APIT
113,364 
118,448 
4.5
Economic Service 
Charge
17                       8 
-53.7
Withholdings Tax
86,070 
104,150 
21.0
Total
488,506 
568,356 
16.3
Source : Department of Fiscal Policy
Revenue from individual income tax rose 
marginally, by 1.7 percent, to Rs. 31.3 billion 
in the first six months of 2026, compared 
to Rs. 30.8 billion in the same period of 
2025. Despite the impact of the higher tax-
free threshold, improved tax administration 
contributed positively to collections, as 
reflected in a 10.8 percent increase in the 
number of individual tax files, to 1,266,976 
as at end-June 2026, compared to end-June 
2025.
Revenue from Withholding Tax (WHT) 
rose significantly, by 21.0 percent, to 
Rs. 104.2 billion in the first six months of

Mid-Year Report 2026 · file page 26 printed page 17

17
2026, compared to Rs. 86.1 billion in the 
corresponding period of 2025. The increase 
mainly reflected the rise in the WHT rate on 
interest income from 5 percent to 10 percent, 
effective April 1, 2025, together with higher 
interest rates.
Value Added Tax (VAT) 
In 
nominal 
terms, 
VAT 
revenue 
rose 
significantly, by 25.4 percent, to Rs. 987.6 
billion in the first half of 2026, compared 
to Rs. 787.3 billion in the same period of 
2025, representing 54.5 percent of the 
annual estimate for 2026. Domestic VAT 
revenue increased by 25.5 percent to Rs. 
543.9 billion, supported by the expansion of 
domestic economic activity and enhanced 
tax administration measures. VAT revenue 
from imports grew by 25.3 percent to Rs. 
443.7 billion, driven mainly by higher import 
volumes across all categories of vehicles.
TABLE 2.6 | Revenue from Value Added Tax: January-June 
2026
Rs. Million
Tax Base
2025
2026
(Provisional)
Growth %
Domestic
433,364 
          543,931 
25.5
Imports
353,967 
         443,690 
25.3
Total Revenue
       787,331 
         987,622 
25.4
Source : Department of Fiscal Policy
Excise Duty 
Revenue from Excise Duty rose by 41.0 
percent to Rs. 562.7 billion in the first half 
of 2026, compared to Rs. 399.2 billion in the 
same period of 2025. The growth was driven 
mainly by higher revenue from motor vehicles, 
cigarettes, and liquor, partly offset by a 
decline in revenue from petroleum and other 
excisable articles. Excise Duty accounted for 
20.8 percent of total tax revenue and 19.0 
percent of total revenue collection in the first 
half of 2026, and achieved 67.5 percent of the 
annual estimate.
Revenue from Excise Duty on motor vehicles 
increased sharply, by 106.2 percent, to Rs. 
266.4 billion in the first half of 2026, compared 
to Rs. 129.1 billion in the same period of 2025. 
This was mainly due to higher vehicle import 
volumes, reflecting the full-year effect of the 
removal of temporary restrictions on motor 
vehicle imports, effective February 01, 2025.
Revenue from cigarettes rose significantly, 
by 31.1 percent, to Rs. 57.7 billion in the first 
half of 2026, compared to Rs. 44.0 billion in 
the same period of 2025. This was primarily 
attributable to an increase in the number of 
cigarette sticks measuring 60 mm to 67 mm 
in length, despite a decline in the number of 
sticks in other length categories.
TABLE 2.7 | Revenue from  Excise Duty: January 
-June 2026
Rs. Million
Tax Base
2025
2026
(Provisional)
Growth %
Liquor
        108,240 
137,520 
27.1
Cigarettes /
Tobacco
          44,023 
57,721 
31.1
Motor Vehicles
         129,146 
266,360 
106.2
Petroleum
         111,990 
95,697 
-14.5
Other
           5,760 
5,386 
-6.5
Total
         399,159 
562,684 
41.0
Source : Department of Fiscal Policy
In contrast, revenue from petroleum declined 
by 14.5 percent to Rs. 95.7 billion in the first 
half of 2026, compared to Rs. 112.0 billion 
in the same period of 2025. This was mainly 
attributable to reduction in diesel import 
volumes compared to the same period of 
2025. Revenue from Excise Duty on other 
excisable 
articles, 
including 
sweetened 
beverages, refrigerators, palm oil, and fatty 
acids, also decreased, by 6.5 percent, to Rs. 
5.4 billion in the first half of 2026, compared 
to Rs. 5.8 billion in the same period of 2025.
FIGURE 2.2 | Performance of Excise Duty: 
January-June 2025 /2026
Source: Department of Fiscal Policy
0
50
100
150
200
250
300
Liquor
Cigarettes
Motor Vehicles
Petroleum
Rs. Bn.
2025
2026

Mid-Year Report 2026 · file page 27 printed page 18

18
Revenue from liquor increased by 27.1 
percent to Rs. 137.5 billion in the first half 
of 2026, compared to Rs. 108.2 billion in 
the same period of 2025. This was due to 
the introduction of new rules on the timing 
of duty payments on liquor production, 
the levying of fees, and higher production 
volumes. Total liquor production rose by 13.3 
percent to 19.7 million absolute litres in the 
first half of 2026, from 17.4 million absolute 
litres in the same period of 2025. Revenue 
from Excise Duty on liquor achieved 56.6 
percent of the annual estimate in the first half 
of 2026.
Other Taxes 
Revenue from other taxes increased by 24.1 
percent to Rs. 591.9 billion in the first half 
of 2026, compared to Rs. 477.1 billion in the 
same period of 2025. 
Revenue from the Customs Import Duty (CID) 
increased notably, by 63.6 percent, to Rs. 
153.7 billion in the first half of 2026, compared 
to Rs. 94.0 billion in the same period of 2025. 
This was mainly due to higher motor vehicle 
import volumes and the imposition of a 50.0 
percent surcharge on CID rates applicable to 
motor vehicles.
Revenue from the CESS levy increased 
marginally, by 1.0 percent, to Rs. 41.9 billion 
in the first half of 2026, compared to Rs. 41.5 
billion in the same period of 2025.  Despite 
the phased removal of CESS, revenue from 
imports remained unchanged at Rs. 40.8 
billion. Meanwhile, CESS revenue from 
exports increased significantly, by 59.0 
percent, to Rs. 1.0 billion, in the first half of 
2026, compared with Rs. 0.6 billion in the 
same period of 2025. Revenue from the CESS 
levy represented 46.5 percent of the annual 
estimate of Rs. 90.0 billion for 2026.
Revenue from the Ports and Airports 
Development Levy (PAL) increased by 10.6 
percent to Rs. 94.5 billion in the first half of 
2026, compared to Rs. 85.4 billion in the same 
period of 2025, representing 49.7 percent of 
the annual estimate of Rs. 190.0 billion for 
2026. This was mainly due to broader import-
value growth, reflecting increased economic 
activity.
Revenue from the Special Commodity Levy 
(SCL) increased by 7.2 percent to Rs. 83.2 
billion in the first half of 2026. This was 
contributed by the increase in the applicable 
tax rate on importation of potatoes and 
Big onions, and measures to facilitate rice 
imports.
Revenue from the Social Security Contribution 
Levy (SSCL) rose by 21.5 percent to Rs. 172.1 
billion in the first half of 2026, compared 
to Rs. 141.6 billion in the same period of 
2025, reflecting growth in both imports and 
domestic economic activity. Revenue from 
the Telecommunication Levy declined by 17.3 
percent to Rs. 6.6 billion, compared to Rs. 8.0 
billion in the same period of 2025, reflecting 
lower consumption of telecommunication 
services. Revenue from the Luxury Motor 
Vehicle Tax, the betting and gaming levy, 
the share transaction levy, and other levies 
increased significantly, by 39.6 percent, to Rs. 
40.0 billion in the first half of 2026, compared 
to Rs. 28.6 billion in the same period of 2025, 
representing 66.5 percent of the annual 
estimate of Rs. 60.0 billion for 2026.
Non-Tax Revenue  
Non-tax revenue increased by 43.6 percent 
to Rs. 243.6 billion in the first half of 2026, 
compared to Rs. 169.6 billion in the same 
period of 2025. The growth was mainly 
due to higher revenue from Central Bank 
profit transfers, fines, fees and charges, 
interest income, profits and dividends from 
State-Owned Enterprises (SOEs), and Social 
Security Contributions.
Revenue from fines, fees and charges 
increased by 24.9 percent to Rs. 101.9 billion 
in the first half of 2026, from Rs. 81.6 billion 
in the same period of 2025. The Department 
of Motor Traffic remained one of the major 
contributors to non-tax revenue, accounting 
for 15.4 percent of total revenue from 
fines, fees and charges, driven primarily by 
increased demand for its services, particularly 
the registration of newly imported vehicles. 
Non-Tax Revenue from the Department 
of Immigration and Emigration and the 
Department of Registration of Persons also 
increased slightly.

Mid-Year Report 2026 · file page 28 printed page 19

19
Interest income increased by 12.6 percent 
to Rs. 37.7 billion in the first half of 2026, 
compared to Rs. 33.5 billion in the same 
period of 2025. Profit and dividend receipts 
from SOEs rose by 3.7 percent to Rs. 12.7 
billion, compared to Rs. 12.2 billion in the 
same period of 2025. Revenue from Social 
Security Contributions grew by 11.5 percent 
to Rs. 33.0 billion, compared to Rs. 29.5 
billion in the same period of 2025. Revenue 
from rent income increased by 45.6 percent 
to Rs. 3.9 billion, compared to Rs. 2.7 billion 
in the same period of 2025. Overall, non-tax 
revenue collected in the first half of 2026 
amounted to 67.7 percent of the annual 
estimate of Rs. 360.0 billion for 2026.
Rs. Billion
Item
2025  
Jan – June 
2026 Annual 
Estimate
2026 
Jan-June(a) 
Major Reasons for Variance
Income Taxes
 488.5 
 1,210.0 
 568.4 Income tax increased by 16.3 percent to Rs. 
568.4 billion realizing 47.0 percent of the 
annual estimate in the first six months of 
2026, mainly driven by: 
− 
Increase in the Corporate Income Tax 
(CIT) rate on the liquor, tobacco, and 
betting and gaming industries from 
40 percent to 45 percent, effective 
from April 01, 2025;
− 
Imposition of a 15 percent income tax 
on gains and profits earned or derived 
from any foreign source, effective 
from April 01, 2025;
− 
Increase in the Withholding Tax (WHT) 
rate on interest from 5 percent to 10 
percent, effective  from April 01, 2025;
− 
Increase in wages in the public and 
private sectors;
− 
Gross Domestic Product (GDP) growth 
of 4.7 percent in the first half of 2026, 
reflecting the expansion of economic 
activity; and
− 
Broadening of the tax base through 
stronger tax administration measures, 
reflected in a 12.0 percent increase 
in the number of income tax file 
registrations, to 1,406,497 as at end-
June 2026, from 1,255,384 as at end-
June 2025.
Despite a 4.5 percent increase in APIT 
revenue in the first six months of 2026 
compared to the corresponding period 
of 2025, the combined effect of raising 
the annual tax-free threshold from Rs.1.2 
million to Rs. 1.8 million and broadening 
the 18 percent tax slab, effective from April 
01, 2025, contributed to lower overall 
income tax collection.
TABLE 2.8 | Variance Analysis of Government Revenue

Mid-Year Report 2026 · file page 29 printed page 20

20
Rs. Billion
Item
2025  
Jan – June 
2026 Annual 
Estimate
2026 
Jan-June(a) 
Major Reasons for Variance
Value Added 
Tax (VAT)
 787.3 
 1,812.0
 987.6 VAT revenue increased significantly by 25.4 
percent to Rs. 987.6 billion in the first six 
months of 2026, from Rs. 787.3 billion in 
the same period of 2025, achieving 54.5 
percent of the annual estimate for 2026. 
This performance was mainly driven by:
− 
Removal of the zero-rating of VAT on 
imported fabric and application of the 
standard VAT rate, effective from April 
01, 2026;
− 
Increase in total imports by 26.9 
percent to USD 12.4 billion in the first 
six months of 2026, compared to the 
same period of 2025;
− 
GDP growth of 4.7 percent in the first 
half of 2026, reflecting the expansion 
of economic activity;
− 
Increase in the number of motor 
vehicles imported by 255.7 percent to 
313,480 units in the first six months of 
2026, compared to the same period 
of 2025; and
− 
Increase in the number of registered 
VAT taxpayers by 34.2 percent to 
37,027 as at end-June 2026, from 
27,596 as at end-June 2025, reflecting 
improved VAT compliance supported 
by tax administration measures.
Excise Duty
 399.2 
834.0 
 562.7 Excise Duty revenue increased by 41.0 
percent to Rs. 562.7 billion in the first six 
months of 2026, compared to the same 
period of 2025, reaching 67.5 percent of the 
annual budget estimate. 
This strong outperformance was primarily 
driven by:
− 
Increase in liquor production by 
13.3 percent to 19.7 million absolute 
litres in the first six months of 2026, 
compared to the same period of 2025;
− 
Higher revenue from Excise Duty 
on motor vehicles, following the 
relaxation of import restrictions on 
all types of motor vehicles, effective 
from February 2025;
− 
Increase in the number of motor 
vehicles imported by 255.7 percent to 
313,480 units in the first six months of 
2026, compared to the same period 
of 2025; and
− 
Increase in revenue from Excise Duty 
on cigarettes by 31.1 percent, owing 
to a 2.4 percent increase in the sale of 
cigarette sticks to 921.7 million sticks 
during the review period.
However, revenue from Excise Duty on 
petroleum and other excisable articles, such 
as sugar-based beverages, refrigerators, 
and palm oil fatty acids, declined by 14.5 
percent and 6.5 percent, respectively 
during the review period, which negatively 
affected 
overall 
Excise 
Duty 
revenue 
performance.

Mid-Year Report 2026 · file page 30 printed page 21

21
Rs. Billion
Item
2025  
Jan – June 
2026 Annual 
Estimate
2026 
Jan-June(a) 
Major Reasons for Variance
Customs 
Import Duties
 94.0 
 235.0 
153.7 Customs Import Duty (CID) recorded a 
strong performance in the first six months 
of 2026, reaching 65.4 percent of the annual 
budget estimate for 2026. 
This was supported mainly by:
− Introduction of CID on motor vehicles, 
together with a 50 percent surcharge 
on the applicable CID rates;
− Increase in the number of motor 
vehicles imported by 255.7 percent to 
313,480 units in the first six months of 
2026, compared to the same period of 
2025;
− Introduction 
of 
a 
four-band 
CID 
structure, revising the existing rates of 
0 percent, 15 percent, and 20 percent 
to 0 percent, 10 percent, 20 percent, 
and 30 percent, effective from April 01, 
2026; and
− Increase in imports by 26.9 percent in 
the first six months of 2026, compared 
to the same period of 2025.
Ports and 
Airports 
Development 
Levy (PAL)
 85.4 
    190.0 
94.5 Revenue from the Ports and Airports 
Development Levy (PAL) increased by 10.6 
percent to Rs. 94.5 billion in the first six 
months of 2026, compared to the same 
period of 2025, realising 49.7 percent of the 
annual budget estimate for 2026. 
This was primarily driven by:
− Increase in total imports by 26.9 
percent to USD 12.4 billion in the first 
six months of 2026, compared to the 
same period of 2025.
Special 
Commodity 
Levy (SCL)
 77.6 
 129.0 
 83.2 Revenue from Special Commodity Levy 
(SCL) grew modestly, by 7.2 percent, to Rs. 
83.2 billion in the first six months of 2026, 
compared to the same period of 2025, 
reaching 64.5 percent of the annual budget 
estimate for 2026. 
This growth was mainly attributable to:
− Upward revision of the duty rates on 
big onions from Rs. 10 per kg to Rs. 50 
per kg, and on potatoes from Rs. 60 
per kg to Rs. 80 per kg, effective from 
August 26, 2025
Social Security 
Contribution 
Levy (SSCL)
 141.6 
 333.0 
 172.1 Social Security Contribution Levy (SSCL) 
revenue realised 51.7 percent of the annual 
budget estimate for 2026 in the first six 
months of 2026. 
This was mainly driven by:
−   GDP growth of 4.7 percent in the first 
half of 2026, reflecting the expansion 
of economic activities;
− Imposition of SSCL at the point of 
importation of motor vehicles effective 
from May 01, 2026; and
−
Increase in total imports by 26.9 
percent to USD 12.4 billion in the first 
six months of 2026, compared to the 
same period of 2025.

Mid-Year Report 2026 · file page 31 printed page 22

22
Rs. Billion
Item
2025  
Jan – June 
2026 Annual 
Estimate
2026 
Jan-June(a) 
Major Reasons for Variance
Other Taxes
 78.5 
 167.0 
 88.5 Revenue from other taxes increased by 
12.7 percent to Rs. 88.5 billion in the first 
six months of 2026, compared to the same 
period of 2025, realising 53.0 percent of the 
annual estimate for 2026. This was primarily 
driven by:
− Increase in CESS Levy revenue by 1.0 
percent, owing to higher imports; and
− Increase in revenue from the Luxury 
Tax on motor vehicles to Rs. 21.9 billion 
in the first six months of 2026, from Rs. 
11.4 billion in the same period of 2025, 
following the relaxation of restrictions 
on motor vehicle imports.
However, 
revenue 
from 
the 
Telecommunication 
Levy 
declined 
by 
17.3 percent in the first six months of 
2026, reflecting lower consumption of 
telecommunication services, which partly 
offset the overall performance of other 
taxes.
Non-Tax 
Revenue
 169.6 
 360.0 
 243.6 Non-tax revenue rose sharply, by 43.6 
percent, in the first six months of 2026 
compared to the same period of 2025, 
reaching 67.7 percent of the annual estimate 
for 2026. 
This 
strong 
performance 
was 
mainly 
supported by profit transfers from the 
Central 
Bank, 
interest 
income, 
social 
security contribution receipts, fines, fees 
and charges, rent, and profits and dividends 
of State-Owned Enterprises (SOEs).
Total
 2,321.7 
 5,270.0 
 2,954.2  
Compiled by the Department of Fiscal Policy
(a) Provisional
Box 2.1 І Major Fiscal Measures: January–June 2026
Effective Date
Measures
Income Tax- Amendments to the Inland Revenue Act, No. 24 of 2017
03.06.2026
Inland Revenue (Amendment) Act, No. 11 of 2026
- 
The Inland Revenue (Amendment) Act, No. 11 of 2026 was enacted to give effect to the 
tax revisions proposed in the Budget 2025 and 2026.
x
To remove the requirement of filing the Statement of Estimated Tax payable (SET) 
with effect from the Year of Assessment 2025/2026. 
x
To calculate the amount of each instalment of tax payable by a person for a year of 
assessment based on the income tax payable by such person for the previous year 
of assessment.
x
To exempt payments made by the Sri Lanka Air Force to non-residents for aircraft, 
software licenses, or related services from income tax.

Mid-Year Report 2026 · file page 32 printed page 23

23
Effective Date
Measures
x
To clarify the chargeability of income tax on proceeds from life insurance policies. 
Accordingly, the amounts received under a life insurance policy by an individual 
upon, the death of the insured person, the maturity of the policy or the surrender 
of the policy was excluded in calculating assessable income. However, any annuity, 
pension, retirement, superannuation or similar payments made under the life 
insurance policy are not excluded from assessable income.
x
To treat the amount realized by transferring an asset as a gift or donation to the 
Government of Sri Lanka or to a university established or deemed to be established 
under the Universities Act, No. 16 of 1978, as equal to its net cost immediately before 
the transfer. 
x
To increase the Capital Gains Tax rate applicable to individuals and partnerships 
from 10 percent to 15 percent. The Capital Gains Tax rate applicable to all other 
entities is 30 percent.
x
To revise Tax resident rules as follows: –
i. Any individual holding a special residence visa is not consider a resident of Sri 
Lanka for income tax purpose.
ii. An individual employed on a Sri Lanka-flagged vessel is consider as a resident 
of Sri Lanka only for the period they are employed on the vessel.
iii. A foreign citizen working on a Sri Lanka-flagged vessel is only pay income 
tax solely on income derived from such employment, and not on any other 
foreign income.
x
To consider any unit trust or mutual fund that fails to provide the unit holders, 
with a certificate detailing income, exempt amounts, withholding tax, and other 
information as specified by the Commissioner General, as a company resident in 
Sri Lanka, and the provisions of the Act applicable to resident companies are apply 
accordingly.
x
To allow any donations to the Government or government established funds 
that cannot be fully deducted in the year of assessment to be carried forward as 
qualifying deductions in subsequent years.
x
To waive off the interest imposed under the provisions of the Inland Revenue Act, 
No. 24 of 2017, and the Surcharge Tax Act, No.14 of 2022. 
x
To reduce the minimum investment required to qualify for enhanced capital 
allowances from USD 3 million to USD 250,000.
x
 Other Administrative provisions
In addition to the above amendments, various administrative reforms aimed at 
enhancing compliance, streamlining procedures, and strengthening the efficiency 
and effectiveness of tax administration have been incorporated in the IR Bill.
Stamp Duty- Stamp Duty (Special Provisions) Act, No. 12 of 2006
24.02.2026
Gazette Notification No. 2477/22 dated 24.02.2026
- 
To exempt the Stamp Duty of Rs. 25/= levied on receipts issued for payments exceeding 
Rs. 25,000/= made by the Government to people affected by disasters.
Betting and Gaming Levy – Betting and Gaming Levy Act, No. 40 of 1988
17.12.2025
w.e.f. 01.01.2026
Betting and Gaming Levy (Amendment) Act, No. 25 of 2025
- 
The Betting and Gaming Levy Act, No. 40 of 1988 was amended to give effect to the 
following revenue measures proposed in the Budget Speech 2025:
x
To increase the Gross Collection Levy from 15 percent to 18 percent; and
x
To increase the Casino Entrance Levy imposed on Sri Lanka citizens from USD 50 to 
USD 100.
Social Security Contribution Levy (SSCL) – Social Security Contribution Levy Act, No. 25 of 2022
09.04.2026
w.e.f. 01.07.2026
w.e.f. 01.05.2026
Social Security Contribution Levy (Amendment) Act, No. 10 of 2026
x
To reduce the annual turnover threshold for the registration of Social Security 
Contribution Levy (SSCL) from Rs. 60 million to Rs. 36 million with effect from July 01, 
2026; and
x
To impose SSCL at the time of importation or manufacture and sale of motor vehicles, 
and to exempt motor vehicles from SSCL at the point of after-sales transactions, with 
effect from May 01, 2026.
Box 2.1 І Major Fiscal Measures: January–June 2026 (Contd..)

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24
Effective Date
Measures
Value Added Tax (VAT)- Value Added Tax Act, No. 14 of 2002
01.04.2026
Gazette Notification No. 2478/07 dated 03.03.2026
- To remove zero rate VAT on imported fabric and apply standard VAT rate.
30.06.2026
Value Added Tax (Amendment) Act, No. 14 of 2026
- 
Value Added Tax (Amendment) Act, No. 14 of 2026 was amended to give effect to the 
following key measures:
x
To postpone the effective date of the imposition of VAT on the supply of services 
through electronic platforms by the non-resident suppliers until July 01, 2026.
x
To introduce the provisions relating to the manner of registration, charging, 
collection, filing return, etc. relating to the imposition of VAT on the supply of 
services through digital platforms by non-resident suppliers;
x
To incorporate amendments to the VAT Act consequential to the removal of SVAT 
and to facilitate the refunding process;
x
To allow for the deduction of Entertainment tax charged by the local authorities in 
ascertaining the value of supply of film exhibition service;
x
To write off VAT arrears as per the records of Commissioner General of Inland 
Revenue in respect of projects carried out by construction contractors of Tsunami 
projects;
x
To disallow input tax deduction on the capital goods such as machinery, equipment 
or vehicles imported for projects on re-export basis where the Value Added Tax at 
the time of import is deferred, unless such goods are re-exported as agreed;
x
To mandate and operationalize the use of Point of Sale (POS) Machines by the VAT 
registered persons, within three months of the date so prescribed. 
x
To combine the Social Security Contribution Levy (SSCL) and VAT on financial 
services and to charge as VAT at an increased rate of 20.5% on financial services; 
and
x
To introduce criminal proceedings and sanctions on the offences committed under 
the VAT Act. 
x
To clarify the policy relating to the applicability of VAT on the supply of financial 
services, on Dividend Income.
Excise (Special Provisions) Duty -Excise (Special Provisions) Act, No. 13 of 1989
01.04.2026
Gazette Notification No. 2478/06 dated 03.03.2026
- 
To impose Excise Duty on newly created National Subdivisions, with rates assigned 
based on the prevailing rate applicable to the relevant HS Heading/ Subdivision.
Excise (Ordinance) Duty – Excise Ordinance (Chapter 52)
12.12.2025
Excise Notification No.03/2025 (Gazette Notification No. 2466/22 dated 11.12.2025)
- 
To revise the Annual Excise License Fee and the Security Deposit and to impose one-
time fee for industry entry.
Ports and Airports Development Levy (PAL) – Ports and Airports Developments Levy Act, No. 18 of 2011
01.04.2026
Gazette Notification No. 2478/05 dated 03.03.2026
- 
To impose PAL on newly created National Subdivisions, with rates assigned based on the 
prevailing rate applicable to the relevant HS Heading/ Subdivision.
CESS Levy – Sri Lanka Export Development Act, No. 40 of 1979
01.04.2026
Gazette Notification No. 2478/04 dated 03.03.2026
- 
To impose CESS levy on newly created or amended National Subdivisions.
01.04.2026
Gazette Notification No. 2479/38 dated 10.03.2026
- 
To remove CESS levy on imported fabric as proposed in Budget Speech 2026.
- 
To reduce CESS rate by 50 percent on intermediate input in line with the Development 
Policy Operation (DPO).
Box 2.1 І Major Fiscal Measures: January–June 2026 (Contd..)

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25
Effective Date
Measures
Customs Import Duty (CID) – Revenue Protection Act, No. 19 of 1962
01.04.2026
Revenue Protection Order No. 01/2026 (Gazette Notification No. 2478/03 dated 03.03.2026)
- 
To introduce a Four Band Customs, Import Duty Structure, revising the existing Customs 
Import Duty Rates of 0 percent, 15 percent, and 20 percent to 0 percent, 10 percent, 20 
percent and 30 percent effective from April 01, 2026. 
Customs Surcharge- Customs Ordinance (Chapter 235)
01.02.2026
Gazette Notification No. 2473/31 dated 31.01.2026
- 
To continue the imposition of a 50 percent surcharge on the importation of Motor 
Vehicles till December 31, 2026.
01.04.2026
Gazette Notification No. 2479/55 dated 12.03.2026
- 
To remove the 50 percent of surcharge on the importation of Motor Vehicles considering 
the increase of CID from 20 percent to 30 percent with effect from April 01, 2026.
16.05.2026
Gazette Notification No. 2488/56 dated 15.05.2026
- 
To continue the imposition of a 15 percent of surcharge on the importation of Motor 
Vehicles with effect from May 16,2026 for a period of three months.
18.05.2026
Gazette Notification No. 2488/69 dated 17.05.2026
- 
To avert the manipulation of concession that has been granted the letter of credit 
established on or before May 15,2026 for importation of motor vehicles.
Special Commodity Levy (SCL) – Special Commodity Levy Act, No. 48 of 2007
01.01.2026
Gazette Notification No. 2469/12 dated 31.12.2025
- 
To extend the validity period of prevailing SCL on importation of 62 commodities till 
December 31, 2026.
01.04.2026
Gazette Notification No. 2482/09 dated 31.03.2026
- 
To extend SCL on importation of coconut chips and grant concessions for coconut chips 
used for local Coconut oil milling industry. Furthermore-imposed SCL on importation of 
salt with newly created HS Codes of Rock Salt and Other Salt, effective from April 01, 
2026, to December 31,2026.
05.05.2026
Gazette Notification No. 2487/02 dated 04.05.2026
- 
To Increase SCL on importation of Maize, considering recommendation by Food Policy 
and Security Committee till December 31, 2026.
Imports & Exports (Control) Regulations- Imports and Exports (Control) Act, No. 01 of 1969
23.03.2026
Imports and Exports (Control) Regulations No. 01 of 2026 
(Gazette Extraordinary No. 2481/02 of 23.03.2026)
- 
To allow Air Carriers of Sri Lanka providing international air services to import retreaded 
aircraft tires that confirm to the requirements specified by internationally accredited 
aviation authorities and are classified under HS Code 4012.13, subject to conditions.
01.04.2026
Imports and Exports (Control) Regulations No. 02 of 2026 
(Gazette Extraordinary No. 2482/08 of 31.03.2026)
- 
To update the Special Import License Regulations No. 01 of 2023, in accordance with 
the National Subdivisions of the Harmonized System Codes published by the Revenue 
Protection Order published in the Gazette Extraordinary No. 2478/03 dated March 03, 
2026.
02.04.2026
Imports and Exports (Control) Regulations No. 03 of 2026 
(Gazette Extraordinary No. 2482/12 of 02.04.2026)
- 
To remove Import Control License (ICL) requirement on importation of rice variety 
known as GR 11 rice including Ponni Samba and Kiri/Paal Ponni rice considered to be 
substitutes to Samba and Keeri Samba, respectively and classified under Harmonized 
System (HS) Code of 1006.30.29, until April 30, 2026.
Box 2.1 І Major Fiscal Measures: January–June 2026 (Contd..)

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26
Effective Date
Measures
06.06.2026, 
01.01.2028
Imports and Exports (Control) Regulations No. 04 of 2026 
(Gazette Extraordinary No. 2487/29 of 07.05.2026)
- 
To ban importation of refrigeration and Air Conditioning equipment and accessories 
categorized under HS Headings 84.15, 84.18, 84.19, 84.79, 87.04, and 87.07 and working 
only with Hydrochlorofluorocarbons (HCFCs) with effect from June 06, 2026 and to 
ban importation of compressors categorized under HS Code 8414.30 which are used 
as a component of refrigeration system for such refrigeration and Air Conditioning 
equipment and accessories and working only with Hydrochlorofluorocarbons with 
effect from January 01, 2028.
15.06.2026
Imports and Exports (Control) Regulations No. 05 of 2026 
(Gazette Extraordinary No. 2493/03 of 15.06.2026)
- 
To impose Export Control License (ECL) requirement on exportation of metal related 
products, classified under fifty-five (55) Harmonized System (HS) Codes.
19.06.2026
Imports and Exports (Control) Regulations No. 06 of 2026 
(Gazette Extraordinary No. 2493/39 of 18.06.2026)
- 
To amend regulations pertaining to Payment Terms for importation of goods, making it 
mandatory for; 
x
All banks to assign a unique number to each transaction and forthwith notify the 
Sri Lanka Customs Department of all information including the valid Taxpayer 
Identification Number (TIN) of the respective remitter (importer), address of the 
remitter (importer), address of the beneficiary, account number of the beneficiary, 
bank code, branch code, type of currency and amount, terms of payment, terms of 
delivery, date of remittance, proforma invoice number, and description of goods, 
regarding each transaction relating to, or made under, the number so assigned, 
x
Importers to register with the Sri Lanka Customs Department as an eligible importer 
for the purpose of making advance payments prior to making an advance payment.
Embarkation Levy – Finance Act, No. 25 of 2003
29.12.2025
Gazette Notification No. 2469/03 dated 29.12.2025 
- 
To extend tax exemption period for persons leaving Sri Lanka by aircraft from Mattala 
Rajapaksa International Airport (MRIA) for 18 months years from December 29, 2025, to 
June 26, 2027.
Strategic Development Projects- Strategic Development Projects Act, No. 14 of 2008
08.02.2026
Gazette Notification No. 2474/66 dated 08.02.2026
- 
To prescribe eligibility criteria for projects to be identified as a Strategic Development 
Project and applicable tax exemptions or concessions.
The Colombo Port City Economic Commission Act, No. 11 of 2021
20.01.2026
Colombo Port City Economic Commission (Amendment) Act, No. 1 of 2026
- 
The Port City Economic Commission Act, No. 11 of 2021 was amended to give effect to 
the following key measures:
• 
To remove income tax exemption applicable on employment income of individuals 
employed within the area of Colombo Port City.
• 
To Strengthen Compliance and Monitoring via Annual Estimation and Disclosure of 
Tax Expenditure, mandatory filing of Corporate Income Tax Returns and ongoing 
monitoring of performance targets (jobs, investment realized, time period 
stipulated) by Colombo Port City Economic Commission.
• 
To provide regulatory measures including effective banking supervision in line with 
international standards.
Box 2.1 І Major Fiscal Measures: January–June 2026 (Contd..)

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27
2.3 Government Expenditure
Government expenditure increased by 7.9 
percent to Rs. 2,946.5 billion in the first six 
months of 2026, compared to Rs. 2,730.7 
billion in the same period of 2025. Recurrent 
expenditure rose by 6.5 percent to Rs. 
2,669.9 billion, from Rs. 2,506.8 billion in the 
first six months of 2025. Capital expenditure 
and net lending increased by 23.6 percent 
to Rs. 276.6 billion, compared to Rs. 223.9 
billion in the corresponding period of 2025.
TABLE 2.9 | Performance of Government 
Expenditure: January-June 2026 
Rs. Million
Item
2025
2026 
(Provisional)
Recurrent 
Expenditure
2,506,828
2,669,889
Salary
555,136
621,734
Pension
208,371
240,249
Interest Payments
1,264,591
1,234,580
Other
478,730
573,327
Capital Expenditure 
and Net Lending 
223,879
276,605
Total
2,730,707
2,946,494
Source : Department of Fiscal Policy
Interest Payments
Expenditure on total interest payments, 
comprising interest payments on domestic 
and foreign debt, decreased by 2.4 percent 
to Rs. 1,234.6 billion in the first six months 
of 2026, from Rs. 1,264.6 billion in the same 
period of 2025. This was due to a 3.7 percent 
decrease in interest payments on domestic 
debt, from Rs. 1,117.5 billion to Rs. 1,075.8 
billion, which more than offset an 8.0 percent 
increase in interest payments on foreign 
debt, from Rs. 147.1 billion to Rs. 158.8 billion, 
over the same period.
Salaries and Pensions
Expenditure on salaries and wages of public 
servants, 
including 
Provincial 
Councils, 
increased by 12.0 percent to Rs. 621.7 billion 
in the first six months of 2026, compared to 
Rs. 555.1 billion in the same period of 2025. 
This increase was mainly due to the increase 
in the basic salaries of public servants in 
accordance 
with 
Public 
Administration 
Circular No. 10/2025.
Expenditure on pensions also increased, by 
15.3 percent to Rs. 240.2 billion in the first 
six months of 2026, compared to Rs. 208.4 
billion in the same period of 2025. This was 
due to the Government's policy decision to 
rectify pension anomalies relating to those 
who retired before January 01, 2020.
Welfare Expenditure
During the first six months of 2026, the 
Government incurred Rs. 550.8 billion in 
expenditure on social welfare and social 
security 
programmes. 
This 
covered 
a 
range of welfare measures, including the 
Aswesuma household cash grant, allowances 
for elderly persons, financial assistance for 
kidney patients, allowances for low-income 
differently abled persons, assistance for 
differently abled military personnel, food 
packages for expectant mothers (Poshana 
Malla), school textbooks and school uniforms, 
as well as development assistance, including 
the fertiliser subsidy.
For 2026, Rs. 231 billion was allocated 
for social security expenditure under the 
Aswesuma programme and other categorical 
household cash grants. Of this allocation, 
Rs. 89.6 billion was spent during the first six 
months of 2026 to provide cash grants to 
low-income families.
Government expenditure on health and 
nutrition 
programmes, 
including 
the 
provision of medical supplies to government 
hospitals, amounted to Rs. 88 billion during 
the first six months of 2026. Expenditure on 
welfare programmes in the education sector, 
including free textbooks, school uniforms, 
and shoes for students in difficult schools, 
amounted to Rs. 2.7 billion during the same 
period.
In addition, the Government incurred Rs. 21.4 
billion during the first six months of 2026 on 
subsidies for chemical fertiliser, supporting 
agricultural production and the livelihoods 
of farming communities.

Mid-Year Report 2026 · file page 37 printed page 28

28
TABLE 2.10 | Major Welfare Expenditure: January-June 2026
Rs. Million
Programme
2025
2026 Provisional
Social Welfare
Medical supplies for Government Hospitals (including Ayurvedha)
             44,740 
           88,042 
Health insurance for school children (Suraksha)
                 444 
                386 
Agrahara insuarance scheme for pensioners
                 486 
                602 
Allowance for pre-school teachers
                 334 
                430 
"Ranaviru Mapiya Rakawarana" allowance
                 699 
                705 
Property loan interest to public servants
                 725 
                 643 
Subsidy for economically unprofitable routes, contribution of socially 
obligatory bus services (Sisu sariya, Gami seriya and Nisi seriya) and 
Armed Forces Bus Passes
               1,985 
              1,778 
"Suwasariya" – 1990 free ambulance service
                1,162 
              1,392 
Interest difference on senior citizens' accounts
            10,000 
              1,638 
World Food Programme
                  110 
                  67 
Other
                 906 
              6,410 
Social Security
Cash grant for low income families
             75,329 
            89,692 
Support for low-income differently abled persons
              6,828 
              8,718 
Financial support for elderly people 
             21,086 
             23,135 
Financial support for kidney patients
               2,296 
              2,606 
Financial assistance to purchase school stationeries
               2,815 
              2,377 
Pension
           208,371 
          240,249 
Service compensation for death & injured soldiers
            24,806 
             26,127 
Pension for Farmers
              2,630 
              2,518 
Other
                  152 
                 126 
Health and Nutrition
Thriposha programme
                1,126 
                788 
Nutritional food package for expectant mothers
              3,058 
              2,794 
School nutritional foods programme
              12,215 
             12,722 
Morning meal for pre-school children
                 767 
                805 
Other
                  144 
                 291 
Education
School texbooks
               1,530 
                670 
School uniforms
                   54 
                 226 
Shoes for students in difficult schools
               2,474 
              1,884 
Scholarships – grade 5 students
                 253 
                 344 
Mahapola and bursaries
              2,405 
              2,678 
Loan scheme for the students who are unable to get into the state 
universities
                 758 
                886 
School & higher education season Tickets
              5,900 
             6,400 
Others
                 406 
                 694 
Development Assistance
Fertilizer subsidy
             21,997 
             21,401 
Other
              3,004 
                 636 
Total
           461,995 
          550,859 
Source: Department of National Budget

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29
Sectoral Expenditure  
School Education
During the first six months of 2026, 
Rs. 218 billion was spent on school 
education, of which Rs. 210 billion was 
recurrent expenditure and Rs. 8 billion 
was capital expenditure. Expenditure on 
this programme increased by 15.2 percent 
compared to the same period of 2025.
The Government continued its investment 
in welfare programmes, such as the school 
nutrition programme, the provision of 
school textbooks and school uniforms, 
and the  provision of shoes for students in 
difficult schools, incurring Rs. 16.2 billion in 
the first six months of 2026.
An allocation of Rs. 50 million (Rs. 5,000 
per student) has been made for 2026 as 
an allowance for students with disabilities, 
to provide financial assistance for the 
difficulties they face in their education 
and to ensure that they have better 
opportunities to continue their education 
without interruption.
Expenditure on Teacher Colleges and 
the National Colleges of Education in the 
first six months of 2026 amounted to Rs. 
279 million, an increase of 197 percent 
compared to the same period of 2025.
TABLE 2.11| Expenditure on Major Activities of   School 
Education:  January-June 2026
Rs. Million
Description
2025
2026
(Provisional)
Recurrent Expenditure
Personnel emoluments for
165,975
183,813
School – teachers and other  
staff
National
33,356
38,295
Provincial
132,619
145,518
Welfare Programs
16,971
16,235
Evaluation of examination
3,314
3,345
Capital Expenditure
Rehabilitation/ Infrastructure 
Developments in School
362
2,077
Teacher development
94
279
Qualitative Development 
Reforms in Education
1
34
Provincial Education
2,873
5,745
Source: Department of National Budget
TABLE 2.12 |  Expenditure on Major Activities of Higher 
Education: January-June 2026
Rs. Million
Description
2025
2026 
(Provisional) 
Recurrent Expenditure
Personnel emoluments of 
universities & other higher 
educational institutions
29,928
33,783
Mahapola and Bursary payment
2,405
2,678
Capital Expenditure
Improvement of facilities 
in universities and higher 
educational institutions
3,205
2,943
Building Complex for the Faculty 
of Health Care Science, Eastern 
University (GOSL-Kuwait)
121
672
Establishment of Faculty of 
Medicine at University of 
Sabaragamuwa – Phase ii (GOSL-
Saudi)
222
270
Wayamba University Township 
Development Project (GOSL – 
Saudi)
133
22
Other Development Projects
174
151
Source: Department of National Budget
Capital expenditure of Rs. 8.1 billion was 
mainly spent on the rehabilitation and 
infrastructure development of schools, 
including those in the provincial education 
sector.
Higher Education 
Expenditure 
on 
university 
education 
decreased by 2.3 percent to Rs. 46.9 billion in 
the first six months of 2026, compared to the 
same period of 2025. Recurrent expenditure 
increased by 14.3 percent to Rs. 42.4 billion, 
while capital expenditure amounted to Rs. 
4.6 billion.
The Government increased the Mahapola 
scholarship for university students from Rs. 
7,500 to Rs. 10,000 and the bursary from Rs. 
6,500 to Rs. 9,000, incurring an expenditure 
of Rs. 2.7 billion on these allowances in the 
first six months of 2026.
Skills 
Development 
and 
Vocational 
Education
In the first six months of 2026, total 
expenditure on Skills Development and 
Vocational Education amounted to Rs. 
5,552 million, of which Rs. 4,828 million was 
recurrent expenditure and Rs. 724 million was

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30
TABLE 2.13| Expenditure on Major Activities of 
Skills Development and Vocational Education: 
January-June 2026
Rs. Million
Description
2025
2026 
(Provisional)
Skills Development and 
Vocational Education
2,810
3,386
Technical Education and 
Training
1,258
1,435
Nipunatha Sisu Diriya
317
484
Modernization of 7 Colleges 
of Technology & Technical 
Colleges
54
11
Season Tickets for Vocational 
Students
53
48
Self-Employment Promotion 
Initiative (SEPI) Programme
34
89
Improvement of Vocational 
Training
3
82
Development of Vocational and 
Technological Training
8
17
Source: Department of National Budget
TABLE 2.14 | Expenditure on major Activities of 
Science & Technology: January-June 2026
Rs. Million
Description 
2025
2026 
(Provisional)
Science & Technology 
Collaboration under  Bilateral 
and Multilateral cooperation
2.4
0.35
Facilitation of Research Projects
0.3
2.92
Science and Technology Policy 
formulation and Implementation 
-
0.27
Source: Department of National Budget
capital expenditure. Recurrent expenditure 
increased by 11.3 percent and capital 
expenditure increased by 70.7 percent, 
compared to the same period of 2025.
The monthly allowance (Nipunatha Sisu 
Diriya) for students pursuing vocational 
education was increased from Rs. 5,000 to 
Rs. 7,500, with an additional allocation of Rs. 
350 million compared to 2025. Expenditure 
on this allowance amounted to Rs. 484 
million in the first six months of 2026.
Rs. Million
Description
2025
2026
(Provisional)
Total Recurrent Expenditure
190,152
264,388
Service delivery expenditure 
95,953
118,950
of which; salaries of medical
personnel and support staff 
75,753
99,463
Provision of Medicine
44,793
88,025
Provincial health
49,406
57,413
Public Investment Expenditure
12,620
16,015
Medical equipment
2,326
3,003
Health System Enhancement 
Project – ADB
903
686
Improvement of ETU- Facilities 
under Line Ministry Hospitals
79
46
Provision of High-Quality 
Radiotherapy for Cancer 
Patients in Sri Lanka with High 
Energy Radiation
495
1760
Establishment of a Bone Marrow 
Transplant Unit – TH Kandy
62
162
Construction of Heart Centre at 
Lady Ridgeway Hospital 
184
113
Construction of 5 Storied 
Surgical Wards and Operation 
Theatre Complex – DGH 
Monaragala 
71
27
Construction of a Ten-Storied 
Building at the PGH Badulla 
98                   – 
Capacity building of Biomedical 
Engineering Service in Sri Lanka
267
271 
Construction of Surgical Medical 
Unit – TH Karapitiya
59
100 
Construction of Cardiac Care 
Complex-TH Rathnapura
43
54 
Construction of Cancer 
Treatment Unit in NH Kandy 
132
85 
Expansion of Health Facilities 
Through the Construction of 
a Five-Storey Building – BH 
Kalawana
- 
207 
Construction of 8 storied 
Medical Ward Complex stage 
II – TH Kalutara
- 
40 
Primary Health Care System 
Enhancing Project (PHSEP) 
(GoSL_WB)
- 
276 
Other Capital Investments
7,505
6,565
Provincial Health Investment
396
2,620
Source: Department of National Budget
Science and Technology 
In the first six months of 2026, total 
expenditure on Science and Technology 
amounted to Rs. 1,582.2 million, of which 
Rs. 1,369.5 million was recurrent expenditure 
and Rs. 212.7 million was capital expenditure.
TABLE 2.15 | Expenditure on Major Activities of 
Health Sector: January-June 2026
Health
The total government expenditure on health, 
including the western and indigenous 
medicine sectors, increased by 38 percent 
to Rs. 280.4 billion in the first six months 
of 2026, compared to the same period 
of 2025. This covers both Provincial and

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31
TABLE 2.16 | Expenditure on Major Activities of 
Agriculture Sector Development: January-June 
2026
Rs. Million
Description
2025
2026
(Provisional)
Food Crops Development
46,835
55,867
O/W Fertilizer Subsidy
21,997
21,401
Maintaining a buffer stock of 
paddy
- 
6,501 
Compensation for Paddy and 
Selected Other Crops Affected 
by Cyclone Ditwah
- 
4,021 
Livestock Developemnt
616
2,134 
O/W Compensation for 
Losses of Selected Animals in 
Registered Livestock Farms 
Affected by Cyclone Ditwah
- 
1,379 
Plantation Industry
3,948 
4,996 
Fisheries and Aquatic 
Resources
3,954 
3,183 
Land and Land Development
4,007 
4,200 
Grand Total
59,360
70,380
Source: Department of National Budget
completion of ongoing projects. Accordingly, 
a number of projects in the water supply 
and sanitation sector are currently being 
implemented under both local funds and 
foreign financing facilities.
Through 
these 
investments, 
the 
Government's primary objective is to improve 
the health and living standards of the public 
by expanding access to safe drinking water 
across the island and improving sanitation 
facilities.
Roads and Bridges
During the period January to June 2026, 
total expenditure on roads and bridges 
amounted to Rs. 76,186 million, a reduction 
of approximately 2.7 percent compared with 
the corresponding period of the previous 
year.
The reduction was mainly attributable to 
lower spending on major road development 
activities 
and 
on 
the 
financing 
of 
commitments of the Road Development 
Authority. 
However, 
this 
decline 
was 
partly offset by increased expenditure 
on 
selected 
infrastructure 
activities, 
including road widening and improvement, 
construction of bridges and flyovers, and 
rural road development. In particular, the 
continued level of expenditure on road 
maintenance, widening and improvement, 
and the reconstruction of damaged or weak 
bridges on national highways highlights 
the importance of maintaining the existing 
road network and addressing infrastructure 
bottlenecks alongside the development of 
new infrastructure.
The significant reduction in expenditure 
under 
Gap 
Financing 
of 
the 
Road 
Development Authority's commitments was 
mainly due to the settlement of certain loan-
related obligations in 2025. Therefore, lower 
expenditure under this category does not 
necessarily reflect a corresponding reduction 
in road-sector activities.
Furthermore, 
the 
Ditwah 
rehabilitation 
programme 
recorded 
relatively 
slower 
progress during the period under review, 
as most contracts were at the design 
and bidding stages. Consequently, both 
expenditure and physical progress remained 
Central Government health expenditure. Of 
the total, recurrent expenditure amounted 
to Rs. 264.4 billion and capital investment to 
Rs. 16.0 billion. Medical supplies, one of the 
major categories of recurrent expenditure, 
accounted for Rs. 88.0 billion, covering 
pharmaceuticals, 
surgical 
items 
and 
laboratory items.
Agriculture
Expenditure on the agriculture sector, 
including plantation, livestock, fisheries 
and land development, increased by 18.6 
percent to Rs. 70.4 billion in the first six 
months of 2026, compared to Rs. 59.4 
billion in the same period of 2025.
Water Supply and Sanitation
To ensure the provision of safe water supply 
and quality sanitation services to the public, 
the Government spent Rs. 6,091 million in 
the first six months of 2026. Of this, Rs. 517 
million was recurrent expenditure and Rs. 
5,574 million was capital expenditure.
With the objective of providing safe and 
clean drinking water to the majority of 
the 
population, 
special 
attention 
has 
been given to initiating new water supply 
projects, upgrading the capacity of existing 
water supply systems, and expediting the

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32
 TABLE  2.17 |  Expenditure on Roads and Bridges: January – June 2026
Rs. Million
Project/Programme
2025
2026           
(Provisional)
1. Expressways Development 
15,793
15,534
Central Expressway Project
14,577
10,220
Colombo – Rathnapura – Pelmadulla Expressway
523
502
Elevated Highway from New Kelani Bridge to Athurugiriya
3 
                   – 
Port Access Elevated Highway Project
690
2,547
Construction of System interchange at Kadawatha and 500m road towards 
Meerigama in Central Expressway Section I  
                     –               2,265 
2. Roads Development 
25,443
24,210
Road Maintenance and Improvement 
11,000
11,841
Colombo District Road Development Project
777
443
Western Province National Highways
124
                  93 
Integrated Road Investment Programme (iRoad)
2,913
2,957
Rehabilitation of the A 17 Road Corridor Project (Rakwana – Suriyakanda) 
378                 564 
Inclusive Connectivity and Development Project
3,830
3,827
Development of an alternative Road Network to Access Main Roads and 
Expressways and to ease the Traffic Congestion
5,588
1,581
Provincial Road Maintanance and Rehabilitation
389
2,040
Other Roads Development
444
864
3. Widening and Improvement of Roads
704             3,700 
4. Construction of Bridges and Flyovers
3,174               4,939 
Reconstruction of Damaged/ Weak Bridges on National Highways
230               1,196 
Construction of Rural Bridges using old bridge components
151
156
Design and Construction of Flyovers in Kohuwala and Gatambe
81              3,409 
Construction of Flyovers over the Railway Line at Uttharananda Mawatha and 
near the Slave Island Railway Station
2,576
                   – 
Reconstruction of 25 Bridges on National Highways 
136
52
Construction of Vadduvakal Bridge in Mullaitivu
                     – 
126
5. Maganeguma Rural Road Development Programme
388             4,494 
6. Lands & Land Improvements (Other projects excluding priority projects)
3,235 
1,739
7. Gap Financing of the Road Development Authority’s Commitments
29,526
20,741
8. Dithwa Rehabilitation
                     –                 829 
Total
78,263             76,186 
Source: Department of National Budget
limited. Progress is expected to improve 
as the ongoing design and procurement 
processes are completed and the contracts 
move into the implementation stage.
Transport
Government expenditure on the transport 
sector increased by 9.1 percent to Rs. 
33.5 billion in the first six months of 2026, 
compared to the same period of 2025, 
of which Rs. 22.2 billion was recurrent 
expenditure and Rs. 11.3 billion was capital 
expenditure. This increase was mainly 
driven by the rehabilitation of railway 
rolling stock and railway tracks, and the 
construction of the Kandy Multimodal 
Transport Terminal.
During the first six months of 2026, the 
Railway Department spent Rs. 8.7 billion on 
key infrastructure initiatives, including the 
Colombo Suburban Railway Project, the 
rehabilitation and maintenance of railway 
infrastructure, and the rehabilitation of the 
railway line from Maho to Omanthai.
In the first half of 2026, expenditure on bus 
transportation was Rs. 7.2 billion. This was 
spent on welfare services such as operating 
SLTB buses on economically unprofitable 
routes and issuing school and higher 
education season tickets. The Department 
of Motor Traffic spent Rs. 1.0 billion during 
this period on the implementation of the 
Motor Traffic Act.
Housing Development
To enhance the living standards of the 
people and ensure housing security, a total

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33
of Rs. 9,195 million was spent during the first 
six months of 2026. Of this amount, Rs. 420 
million was spent on recurrent expenditure 
and Rs. 8,775 million on capital expenditure.
In 2026, priority has been given to provide 
safe and adequate housing facilities for 
low-income and housing-deprived families 
under the “Thamangema Thenak – Lassana 
Jeewithayak” (A Place of One’s Own – A 
Beautiful 
Life) 
programme. 
Under 
this 
programme, implemented by the Ministry 
of Housing, Construction and Water Supply, 
the construction of 10,500 housing units is 
targeted for 2026, and financial assistance 
amounting to Rs. 4,404 million was provided 
during the first six months of the year.
Concurrently, the Ministry of Plantation and 
Community Infrastructure has implemented a 
programme to construct 2,897 housing units 
to meet the housing needs of the plantation 
community, with an expenditure of Rs. 397 
million incurred for this purpose during the 
period under review. Furthermore, with the 
aim of creating a safer and better living 
environment for low-income communities 
in urban areas, financial progress amounting 
to Rs. 2,297 million was achieved during the 
first six months of 2026 for the construction 
of 2,726 low-income housing units under the 
Urban Regeneration Programme and the 
Chinese Aid Programme.
Through these initiatives, the Government 
continues to strengthen housing security 
and improve the overall quality of life of 
vulnerable segments of society. 
Urban Development
The total expenditure on urban development 
amounted to Rs. 1,380 million during the 
first six months of 2026. Of this amount, Rs. 
838 million was spent on urban facilities 
development initiatives, mainly comprising 
the 
Siyak 
Nagara/Urban 
Infrastructure 
and Township Development Programme 
and the Development of Strategic Cities– 
Anuradhapura Programme.
Expenditure on waste management and 
environmental protection amounted to Rs. 
542 million. Key projects and programmes 
implemented under this category included 
the Oliyamulla and Kolonnawa stormwater 
management programmes, as well as the 
maintenance and rehabilitation of existing 
canals, lakes, wetlands, and walkways.
Environment
During the first six months of 2026, total 
government expenditure on the environment 
sector amounted to Rs. 6.7 billion, of which 
Rs. 6 billion was incurred as recurrent 
expenditure and Rs. 649 million as capital 
expenditure. Of this total expenditure, Rs. 
155 million was spent on environmental 
protection, Rs. 243 million on the expansion 
and protection of forest cover, and Rs. 
213 million on mitigating human–elephant 
conflict, including the establishment of 
electric fences.
In addition, Rs. 117 million was utilized for 
implementing major activities related to 
coastal conservation and coastal resource 
management, while Rs. 27 million and Rs. 
36 million were spent on the development 
of 
zoological 
gardens 
and 
botanical 
gardens, 
respectively. 
The 
remaining 
expenditure was utilized for operational 
and administrative activities associated 
with the implementation of programmes 
and policies relating to environmental 
protection, wildlife conservation, forest and 
coastal conservation, and the development 
of zoological and botanical gardens.
Irrigation and Water Management
During the first six months of 2026, 
expenditure 
on 
irrigation 
and water 
management 
amounted 
to 
Rs. 
13.6 
billion. Of the total expenditure, Rs. 7.5 
billion was spent on the development 
and improvement of irrigation systems 
implemented by the Line Ministry and the 
Department of Irrigation. The remaining 
Rs. 6.1 billion was spent on the Mahaweli 
Water Security Investment Programme 
(Stage II).
2.4 Performance of the Cash Flow of the 
General Treasury
The General Treasury’s cash flow operations 
during 
2026 
indicate 
a 
significant 
improvement in the Government’s fiscal 
liquidity position compared with the budget 
estimates. 
Higher-than-anticipated 
cash

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34
inflows, together with prudent expenditure 
management, 
significantly 
reduced 
the 
projected cash deficit and enabled the 
Treasury to maintain a healthy cash balance 
at the end of the period. These developments 
reflect the Government’s continued efforts to 
strengthen revenue collection mechanisms, 
enhance fiscal discipline, and improve the 
efficiency of public financial management.
According to the Treasury Cash Flow 
Statement, total cash inflows from revenue 
and other receipts amounted to Rs. 2,877.5 
billion, compared with the estimated inflow of 
Rs. 2,425.1 billion. This represents an increase 
of Rs. 452.4 billion, or 18.7 percent, above 
the estimate. This favourable performance 
reflects improved revenue mobilization and 
stronger-than-expected 
collections 
from 
government revenue sources and other 
receipts.
On the expenditure side, total cash outflows 
for recurrent payments amounted to Rs. 
2,616.7 billion, compared with the estimated 
Rs. 3,166.7 billion. This represents a reduction 
of Rs. 550.0 billion from the budget 
estimate, indicating effective expenditure 
management 
and 
the 
containment 
of 
recurrent spending during the period under 
review. Similarly, cash outflows for capital 
payments amounted to Rs. 336.6 billion, 
compared with the estimated Rs. 545.8 
billion, resulting in lower expenditure of Rs. 
209.2 billion than the estimated amount. This 
outcome may be attributed to the phased 
implementation of development projects 
and the prioritization of public investment 
expenditure.
As 
a 
result 
of 
higher-than-estimated 
cash 
inflows 
and 
lower-than-estimated 
expenditure, the net cash deficit was 
substantially lower than originally anticipated. 
While a deficit of Rs. 1,287.3 billion had been 
projected, the actual deficit amounted 
to only Rs. 75.8 billion. This represents an 
improvement of Rs. 1,211.5 billion compared 
with the estimated position and highlights 
the positive impact of enhanced revenue 
performance 
and 
expenditure 
control 
measures on overall Treasury operations.
To finance its obligations, the Government 
raised gross borrowings amounting to Rs. 
1,655.8 billion during the period, which 
was lower than the estimated borrowing 
requirement of Rs. 1,737.2 billion. Meanwhile, 
debt repayments amounted to Rs. 1,835.3 
billion, 
compared 
with 
the 
estimated 
repayment requirement of Rs. 1,882.4 billion. 
Consequently, 
net 
borrowing 
recorded 
a negative balance of Rs. 179.6 billion, 
compared with the estimated negative 
net borrowing position of Rs. 145.2 billion, 
indicating that debt repayments exceeded 
new borrowings during the period. This 
reflects the Government’s commitment to 
prudent debt management and the gradual 
reduction of its reliance on borrowing.
Consequently, the closing cash balance 
at the end of the period stood at Rs. 
690.3 billion, significantly exceeding the 
estimated negative balance of Rs. 516.6 
billion. Maintaining a substantial positive 
cash balance demonstrates the effectiveness 
of the Government’s cash management 
strategies 
and 
provides 
an 
important 
liquidity buffer to meet future expenditure 
requirements and debt service obligations.
Overall, the General Treasury’s cash flow 
performance in 2026 reflects a notable 
strengthening of fiscal operations, supported 
by robust revenue performance, expenditure 
control, and prudent debt management 
practices. 
TABLE  2.18 | Government  Treasury Cash Flow 
Operations: January-June 2026
Rs. Billion
Item
2026
     Est
Act
Opening Cash balance year /
month
915.8            915.8 
 Total cash inflow from revenue 
and other receipts 
2,425.1         2,877.5 
 Total cash outflow for 
recurrent payments  
-3,166.7
-2,616.7
 Total cash outflow for capital 
payments 
-545.8
-336.6
 Net cash surplus / (deficit) 
-1,287.3
-75.8
 Gross borrowing 
1,737.2         1,655.8 
 Debt repayment  
-1,882.4
-1,835.3
 Net borrowing 
-145.2
-179.6
 Adjustment account balance 
(TEB, net deposits, Other 
Transfer, etc…) 
-             29.8 
Closing Cash balance year /
month end
-516.6
690.3 
 Source: Department of Treasury Operations

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35
CHAPTER 3
Performance of State Owned Enterprises
3.1 Overview 
Consistent with the operational headwinds 
seen across all other sectors of the economy, 
the State Owned Enterprise (SOE) sector 
faced similar challenges in the second 
quarter of 2026 as a result of the Middle East 
conflict, including rising input costs, supply 
chain disruptions, and order cancellations. 
Despite these challenges, the 51 major SOEs 
reported improved performance in the first 
six months of 2026, recording a total profit 
of Rs. 259.3 billion, compared to Rs. 227.8 
billion in the same period of 20251.  
During the period from April to June 2026, 
the General Treasury provided subsidies 
of Rs. 41 billion to the Ceylon Petroleum 
Corporation (CPC) and Rs. 15 billion to the 
National System Operator (Private) Limited 
(NSO), to mitigate the adverse impacts of 
the Middle East conflict on the public and 
the wider economy. 
With the approval of the Cabinet of Ministers, 
a dedicated unit for the restructuring 
of SOEs was established in March 2026 
under the Ministry of Finance, Planning and 
Economic Development. The unit is currently 
engaged in the liquidation of 33 selected 
SOEs. Further, in line with the 2026 Budget 
proposal, the General Treasury continued to 
settle long-outstanding liabilities of selected 
SOEs relating to Employees’ Provident 
Fund (EPF) and Employees’ Trust Fund (ETF) 
contributions and gratuity payments. By the 
end of August 2026, Rs. 2.8 billion had been 
settled out of the Rs. 5 billion allocated for 
this purpose.  
Meanwhile, marking a significant milestone 
in the electricity sector, the functions of 
the Ceylon Electricity Board (CEB) were 
transferred to six fully government-owned 
1 
With respect to Ceylon Electricity Board, profit for 
the period from 01.01.2026 to 09.03.2026 has been 
considered for 2026.
companies, which officially commenced 
operations on March 9, 2026. In support of 
this reform, the General Treasury provided 
approximately Rs. 8 billion in equity to 
Electricity Generation Lanka (Private) Limited 
(EGL), National Transmission Network Service 
Provider (Private) Limited (NTNSP), Electricity 
Distribution Lanka (Private) Limited (EDL), and 
National System Operator (Private) Limited 
(NSO) to settle liabilities arising from the 
compulsory retirement scheme introduced 
for employees. 
The collection of levies and dividends from 
the SOEs increased to Rs. 12.6 billion in the 
first six months of 2026, compared to Rs. 11.7 
billion in the same period of 2025.  
3.2 Review of the Ten Major State Owned 
Business Enterprises (SOBEs) 
Bank of Ceylon  
The asset base of the Bank of Ceylon (BoC) 
decreased marginally by 0.9 percent to 
Rs. 5,421 billion as at end June 2026, from 
Rs. 5,468 billion as at end 2025. Loans 
and advances increased by 6.6 percent to 
Rs. 2,529 billion as at end June 2026, from 
Rs. 2,372 billion as at end 2025.  During the 
first six months of 2026, the deposit base 
of the bank decreased by 1.6 percent to 
Rs. 4,319 billion, compared to Rs. 4,389 billion 
as at end 2025. The impaired loans (Stage III) 
ratio of the bank improved to 5.01 percent as 
at end June 2026, compared to 5.59 percent 
as at end 2025. During the first six months 
of 2026, the BoC recorded a strong financial 
performance, with Profit before Tax (PBT) of 
Rs. 62.6 billion, compared to Rs. 59.4 billion 
in the same period of 2025. This increase was 
primarily driven by a 9.2 percent increase in 
total operating income to Rs. 131.4 billion in 
the first six months of 2026.

Mid-Year Report 2026 · file page 45 printed page 36

36
People’s Bank  
The asset base of People’s Bank (PB) 
increased marginally by 1.2 percent to 
Rs. 3,754 billion as at end June 2026, from 
Rs. 3,708 billion as at end 2025. The deposit 
base of the bank decreased by 2.0 percent 
to Rs. 3,165 billion as at end June 2026, 
compared to Rs. 3,230 billion as at end 
2025. Loans and advances increased by 9.7 
percent to Rs. 1,899 billion as at end June 
2026, compared to Rs. 1,731 billion as at end 
2025. Impaired loans (Stage III) ratio of the 
bank has improved to 6.7 percent as at end 
June 2026, compared to 7.7 percent as at 
end 2025. PB recorded an all-time high profit 
before tax of Rs. 32.6 billion in the first six 
months of 2026, compared to Rs. 28 billion 
in the same period of 2025, mainly due to an 
18.9 percent increase in net interest income 
to Rs. 82.4 billion. 
National Savings Bank 
The asset base of the National Savings Bank 
(NSB) recorded a marginal increase of 2.1 
percent to Rs. 1,870 billion as at end June 
2026, from Rs. 1,831 billion as at end 2025. 
The deposit base of the bank increased 
by 1.6 percent to Rs. 1,633 billion as at end 
June 2026, from Rs. 1,608 billion as at end 
2025. Loans and advances increased by 
9.0 percent to Rs. 601 billion as at end June 
2026, compared to Rs. 551 billion as at end 
2025. The impaired loans (Stage III) ratio of 
the bank has improved to 2.1 percent as at 
end June 2026, compared to 2.5 percent 
as at end 2025. NSB’s PBT decreased by 
6.2 percent to Rs. 22.6 billion in the first six 
months of 2026, compared to Rs. 24.1 billion 
in the same period of 2025, mainly due to a 
10.0 percent increase in personnel expenses 
to Rs. 13.8 billion.  
Sri Lanka Insurance Corporation Limited 
Sri Lanka Insurance Corporation Limited 
(SLIC) recorded revenue of Rs. 3,067 million 
in the first six months of 2026, an increase of 
8.3 percent compared to Rs. 2,833 million in 
the same period of 2025. The SLIC recorded 
an increase in PBT of 10.3 percent to 
Rs. 2,623 million for the period under 
review, compared to Rs. 2,378 million in 
the same period of 2025. Total assets of 
the SLIC increased by 2.5 percent, from 
Rs. 133,430 million as at end December 2025 to 
Rs. 136,750 million as at end June 2026.  
SLIC's fully owned subsidiaries in insurance 
business, 
namely 
Sri 
Lanka 
Insurance 
Corporation Life Limited (SLICLL) and Sri 
Lanka Insurance Corporation General Limited 
(SLICGL), also recorded significant growth 
in revenue of 21.9 percent and 22.8 percent 
to Rs. 34,060 million and Rs. 14,669 million, 
respectively in the first six months of 2026. 
This was mainly due to increases in net 
earned premiums of 15.3 percent in SLICLL 
and 23.9 percent in SLICGL. As a result, SLICLL 
recorded an increase in PBT of 4.4 percent 
to Rs. 1,631 million in the first six months of 
2026, compared to Rs. 1,563 million in the 
same period of 2025. Meanwhile, SLICGL 
recorded a significant increase in PBT by 
20 percent to Rs. 2,504 million, compared 
to Rs. 2,087 million in the same period of 
2025.   As at end June 2026, total assets of 
the SLICLL and SLICGL increased marginally 
to Rs. 288,660 million and Rs. 64,616 million, 
respectively, compared to the total assets as 
at end December 2025.    
Ceylon Electricity Board and the Successor 
Companies 
As part of the major structural reforms 
introduced under the Sri Lanka Electricity 
Act, No. 36 of 2024, Extraordinary Gazette 
Notification No. 2478/41, dated March 05, 
2026, was published declaring that March 
09, 2026 as the “appointed date,” marking 
the legal commencement of operations 
for the CEB’s successor companies. In line 
with these reforms, six wholly government-
owned companies undertook the distinct 
functions 
across 
the 
electricity 
value 
chain, including generation, transmission, 
distribution, system operation, and related 
support services namely EGL, NTNSP, EDL, 
NSO, Energy Ventures Lanka (Private) Limited 
(EVL), and CEB Employees Funds (Private) 
Limited (CEF).  
The General Treasury also provided an 
equity contribution of Rs. 8,006 million 
to facilitate the implementation of the 
Voluntary Retirement Scheme (VRS) for CEB 
employees who did not opt to be assigned 
to the successor companies, as a part of the 
restructuring of the electricity sector.

Mid-Year Report 2026 · file page 46 printed page 37

37
During the first six months of 2026, two 
tariff revisions were approved by the Public 
Utilities Commission of Sri Lanka (PUCSL). 
At the Quarter 2 tariff review in April 2026, 
an overall average increase of 10.3 percent 
in end-user electricity tariffs was approved. 
Subsequently, following an extraordinary 
tariff review in May 2026, an additional 18.0 
percent increase was approved for selected 
consumer categories, namely domestic, 
general-purpose 
and 
religious-purpose 
consumers whose monthly consumption 
exceeds 180 units; hotel consumers under 
H2 and H3 categories; Industrial consumers 
under I2 and I3 categories; and all Government 
entities. 
Meanwhile, 
the 
Government 
provided a subsidy of Rs. 15,000 million to 
NSO to support the remaining consumer 
categories, which represent approximately 
95 percent of the total consumer base.  
During the first six months of 2026, the 
generation mix changed to 25:30:24:21 
for hydro, thermal (coal), NCRE, wind and 
rooftop solar, and thermal (fuel), respectively, 
compared with 34:31:23:12 in the same 
period of 2025. Total electricity generation, 
reflecting the growth in demand, increased 
by approximately 7.0 percent to 9,304 GWh. 
At the same time, hydropower generation 
declined by approximately 23.0 percent, from 
2,975 GWh to 2,294 GWh. Although rooftop 
solar generation increased substantially 
by approximately 57.0 percent, from 711 
GWh to 1,115 GWh, this increase was not 
sufficient to offset the combined impact of 
higher electricity demand and the reduction 
in hydropower generation. Consequently, 
thermal (fuel) generation increased by 
approximately 88.0 percent, from 1,014 GWh 
to 1,904 GWh, to meet the resulting supply 
requirement.  
The revenue from sale of electricity increased 
significantly by 20.0 percent to Rs. 231.2 
billion during the first six months of 2026. This 
comprises the revenue of CEB amounting to 
Rs. 80 billion up to March 09, 2026 and the 
revenue of EDL amounting to Rs. 151.1 billion 
for the rest of the period, compared with 
Rs. 192.5 billion recorded by the CEB during 
the first six months of 2025. This increase 
was mainly attributable to the 7.0 percent 
increase 
in 
electricity 
demand, 
which 
reached 9,304 GWh during the period under 
review, together with two consecutive 
upward revisions to electricity tariffs. As a 
result, the average sales revenue per unit 
increased to Rs. 31.9 per kWh during the first 
six months of 2026, compared to Rs. 24.6 per 
kWh during the same period of 2025. During 
the period from January 01 to March 09, 2026, 
CEB recorded a net profit of Rs. 1.48 billion.    
Ceylon Petroleum Corporation 
The net sales revenue of CPC in the first six 
months of 2026 increased by 40.4 percent 
to Rs. 576.6 billion, compared to Rs. 410.7 
billion in the same period of 2025. This 
mainly reflected the increase in domestic 
fuel prices following the escalation of 
the Middle East conflict at the end of the 
first quarter of 2026. The conflict caused 
significant disruptions to global energy 
supply chains, including restrictions on the 
movement of petroleum shipments through 
the Strait of Hormuz, which contributed to 
an unusual increase in global crude oil and 
petroleum product prices, as well as higher 
shipping and insurance costs. Reflecting the 
increase in global petroleum prices and the 
increased cost of petroleum imports, CPC’s 
total petroleum import bill rose sharply by 
73.8 percent to USD 1,737.9 million in the 
first six months of 2026, compared with USD 
999.9 million in the same period of 2025. 
Consequently, CPC’s cost of sales increased 
by 50.2 percent to Rs. 567.6 billion, compared 
to Rs. 377.9 billion in the same period of 2025. 
As a result, CPC’s gross profit declined by 
72.9 percent to Rs. 8.9 billion, compared to 
Rs. 32.8 billion in the first six months of 2025.  
To minimize the adverse impact of the 
conflict in the Middle East on the daily lives 
of the general public and on the overall 
economy, 
the 
government 
introduced 
measures to stabilize the petroleum industry. 
Accordingly, the General Treasury provided 
approximately Rs. 57 billion as fuel subsidies 
to the players in domestic petroleum market 
of which Rs. 41 billion was provided to the 
CPC for the period from April to June 2026.  
Despite a significant decline in gross profit, 
CPC’s operating profit increased to Rs. 23.9 
billion, compared to Rs. 11.1 billion in the same 
period of 2025, mainly due to the subsidy

Mid-Year Report 2026 · file page 47 printed page 38

38
received for the period from April to June 
2026. Further, CPC recorded an unrealized 
exchange gain of Rs. 7.2 billion, compared 
to Rs. 3.5 billion in the same period of 2025. 
Consequently, CPC’s net profit increased by 
71.8 percent to Rs. 29.2 billion in the first six 
months of 2026, compared to Rs. 17.0 billion 
in the same period of 2025.  
SriLankan Airlines Limited 
SriLankan Airlines Limited (SLA) recorded 
a significant financial loss during the first 
three months of the 2026/27 financial year.  
According to the unaudited management 
accounts submitted by the Company, total 
revenue during the period amounted to 
Rs. 82.8 billion, compared to Rs. 62.6 billion 
in the same period of 2025/26. During the 
period, the escalation of the conflict in the 
Middle East disrupted air connectivity, with 
SLA suspending flights to several Middle 
Eastern 
destinations 
and 
subsequently 
resuming services as airspace restrictions 
were 
eased. The 
disruption 
posed 
a 
significant risk to passenger and cargo 
revenue, particularly given the importance of 
Middle Eastern destinations to SLA's network. 
At the same time, the temporary diversion 
and rerouting of regional air traffic to Sri 
Lanka provided some additional aviation 
activity and passenger movements, partially 
mitigating the adverse impact on the sector.  
Despite the increase in total revenue, during 
the first three months of the 2026/27 financial 
year, total expenditure rose by 40.4 percent 
to Rs. 95.2 billion, compared to Rs. 67.8 billion 
in the same period of 2025/26. This was 
mainly due to a sharp increase of around 93.0 
percent in aircraft fuel costs, which rose to 
Rs. 41.2 billion. Consequently, the company 
recorded an operating loss before exchange 
movements of approximately Rs. 12.5 billion 
during the period. 
The 
company's 
financial 
performance 
was further adversely affected by foreign 
exchange movements. Accordingly, the 
company recorded a loss before tax of 
Rs. 35.6 billion for the period under review, 
compared to the net loss of Rs. 12 billion 
in the same period of 2025/26. Due to the 
improved net income of Rs. 3.4 billion from 
the SriLankan Catering, the net loss recorded 
by the group reduced to Rs. 32.2 billion.   
The 
above 
financial 
performance 
demonstrates that SLA continues to face 
significant structural financial and liquidity 
challenges. The substantial operating deficit, 
high fuel and maintenance costs, foreign 
exchange losses and finance costs continue to 
constrain the Company's ability to generate 
sufficient internal cash flows to meet its 
operational and financial obligations. This is 
particularly significant given the Company's 
existing debt burden and the continuing 
requirement for Government support to 
ensure uninterrupted operations. 
The financial position of SLA remained 
highly leveraged. Total assets as at end June 
2026 amounted to Rs. 209.9 billion, while 
total liabilities stood at Rs. 561.4 billion. 
Consequently, 
the 
company 
reported 
negative equity of Rs. 351.5 billion indicating 
that SLA continued to experience a serious 
loss of capital during the period review. 
During the first six months of 2026, 
Government provided financial support 
to service the first and second instalments 
of selected Bank of Ceylon and People's 
Bank loans under the relevant tripartite 
arrangements. In addition, USD 30 million 
was released to meet SLA's short-term 
funding requirements. Further, following 
the restructuring of the USD 175 million 
guaranteed bonds, the restructured bond 
value of USD 126.5 million was absorbed into 
the Government debt stock with effect from 
March 20, 2026. These measures provide 
essential support to maintain the company's 
operations and address its immediate financial 
obligations amid continuing operational and 
external pressures. Moreover, in June 2026, 
the Cabinet approved the establishment of 
a Strategy and Restructuring Committee 
to undertake a comprehensive review of 
SLA, with the objective of strengthening 
its financial sustainability and commercial 
viability while minimizing the long-term fiscal 
burden on the Government. 
National Water Supply and Drainage Board
During the first six months of 2026, the 
National 
Water 
Supply 
and 
Drainage 
Board (NWS&DB), added nearly 60,000 
water connections to the system, thereby 
increasing the total number of connections to 
3.31 million as at end June 2026. However, as

Mid-Year Report 2026 · file page 48 printed page 39

39
at end June 2026, piped-borne water supply 
coverage and safe drinking water coverage 
decreased to 62.8 percent and 94.5 percent, 
respectively, compared to 63.7 percent 
and 99.1 percent as at end June 2025. This 
was mainly due to differences in reporting 
methodologies, as coverage indicators were 
reported on a household basis in 2025 and on 
a population basis in 2026. Meantime, piped 
sewerage coverage increased marginally 
from 2.08 percent as at end June 2025 to 2.11 
percent as at end June 2026.
The revenue of the NWS&DB for the first six 
months of 2026 increased by 5.1 percent to 
Rs. 43.6 billion, compared to Rs. 41.5 billion in 
the same period of 2025. However, the cost 
of sales increased by approximately 10.0 
percent to Rs. 16.5 billion from Rs. 15 billion, 
mainly due to higher pumping costs and rent, 
rates and other taxes.  As a result, the Board 
recorded a gross profit of Rs. 27.1 billion in 
the first six months of 2026, compared to 
Rs. 26.5 billion in the same period of 2025. 
Nevertheless, net profit decreased by 8.5 
percent to Rs. 16.2 billion, compared to 
Rs. 17.7 billion in the same period of 2025. 
Meanwhile, during the period under review, 
the average unit cost was Rs. 88, an increase 
of Rs. 6 compared to Rs. 82 during the same 
period of 2025.  
During this period, water production and 
water sales each increased by approximately 
5.0 percent reaching 440.8 million m³ and 
333.5 million m³, respectively, compared 
to 419.1 million m³ and 317.6 million m³, 
respectively, in the same period of 2025. 
However, 
Non-Revenue 
Water 
(NRW) 
deteriorated marginally to 24.4 percent from 
24.2 percent during the period under review. 
During the first six months of 2026, the 
Board completed two projects. In addition, 
the General Treasury has provided equity 
capital of Rs. 5.9 billion to facilitate the loan 
repayment and completion of the major 
water supply projects.
Sri Lanka Ports Authority 
Amid heightened uncertainty in international 
trade 
and 
shipping 
arising 
from 
the 
escalation of tensions in the Middle East, 
Sri Lanka Ports Authority (SLPA) recorded 
total revenue of Rs. 53.1 billion in the first 
six months of 2026, a marginal increase of 
2.1 percent compared to Rs. 52 billion in 
the same period of 2025. This performance 
was mainly due to a 9.0 percent increase in 
operational revenue to Rs. 44.1 billion. During 
this period, SLPA closely engaged with 
terminal operators and major shipping lines 
to ensure uninterrupted port operations and 
to manage potential disruptions to global 
shipping routes. The changing regional 
shipping environment therefore presented 
both risks and opportunities for the Port 
of Colombo, particularly given its role as a 
major transshipment hub connecting Asia, 
the Middle East, Africa and Europe. In terms 
of operational performance, containerized 
cargo handled during the period declined 
by 
6.0 
percent 
to 
1.2 
million TEUs, 
whereas conventional cargo increased by 
approximately 15.0 percent to 5.8 million MT. 
During the first six months of 2026, total 
expenditure remained broadly unchanged at 
Rs. 23.7 billion, in line with the same period 
of 2025. As a result, SLPA generated an 
operating profit of Rs. 29.4 billion in the first 
six months of 2026, compared to Rs. 28.3 
billion in the same period of 2025. 
Net finance income increased to Rs. 2.4 billion 
in the first six months of 2026, compared 
to Rs. 1.7 billion in the same period of 2025 
owing to a 25.0 percent increase in finance 
income. In addition, SLPA recorded a foreign 
exchange gain of Rs. 2.7 billion in the first six 
months of 2026, compared to the foreign 
exchange loss of Rs. 0.8 billion in the same 
period of 2025. Accordingly, profit before 
tax, after accounting for foreign exchange 
gains, increased to Rs. 34.5 billion, compared 
to Rs. 29.2 billion in the same period of 2025. 
After providing Rs. 5.4 billion for income 
tax, SLPA’s profit recorded an increase of 
19.0 percent to Rs. 29.1 billion, compared to 
Rs. 24.5 billion in the same period of 2025.
Overall, 
SLPA 
demonstrated 
improved 
profitability during the first six months of 
2026, supported by higher operational 
revenue, 
stable 
expenditure, 
improved 
net finance income, and favorable foreign 
exchange movements. However, the decline 
in containerized cargo volumes and the 
changing 
global 
shipping 
environment

Mid-Year Report 2026 · file page 49 printed page 40

40
remain areas requiring close monitoring to 
sustain the Authority's financial performance. 
Airport and Aviation Services (Sri Lanka) 
(Private) Ltd 
Airport and Aviation Services (Sri Lanka) 
(Private) Limited (AASL) recorded strong 
financial performance during the first half 
of 2026. Total revenue increased by 15.0 
percent to Rs. 27.5 billion in the first six 
months of 2026, compared to Rs. 23.9 billion 
in the same period of 2025. This was mainly 
driven by a 17.0 percent increase in non-
aeronautical revenue to Rs. 23.4 billion. The 
growth in revenue was achieved despite 
significant disruptions to regional aviation 
following the escalation of the Middle East 
conflict. The temporary closure of airspace 
and suspension of flights to and from 
several Middle Eastern destinations led to 
a significant number of flight cancellations, 
including 115 cancellations at Bandaranaike 
International Airport in a single day. However, 
the diversion and rerouting of aircraft 
and passengers to Sri Lanka during the 
disruption provided an offsetting benefit to 
the country's aviation sector and supported 
airport-related activities.  
Total expenditure of the company increased 
marginally by 1.8 percent to Rs. 11.3 billion 
in the first six months of 2026, compared to 
Rs. 11.1 billion in the same period of 2025. As 
a result, AASL increased its operational profit 
by 26.0 percent to Rs. 16.1 billion, compared 
to Rs. 12.8 billion in the same period of 2025. 
AASL's financial performance was further 
strengthened by higher finance income and 
favorable foreign exchange movements. 
Finance income increased by 20.0 percent to 
Rs. 4.2 billion, while the company recorded 
an exchange gain of Rs. 5.6 billion, compared 
to the exchange loss of Rs. 4.3 billion in the 
same period of 2025. Consequently, AASL 
recorded a profit before tax of Rs. 24.9 billion 
in the first six months of 2026, an increase of 
122.0 percent compared to Rs. 11.2 billion in 
the same period of 2025.  
Overall, AASL recorded strong financial 
performance 
during 
the 
period 
under 
review.  However, the continuing uncertainty 
in the Middle East, particularly its potential 
impact on flight connectivity and passenger 
movements, warrants close monitoring given 
the importance of Middle Eastern routes to 
Sri Lanka's aviation and tourism sectors.

Mid-Year Report 2026 · file page 50 printed page 41

41
TABLE 3.1 | Reform/ Key initiatives for Major SOEs
Institution
Reform/Key Initiatives
State-Owned Banks
• Strengthened the governance and effectiveness of Boards of Directors 
through an extraordinary procedure for selecting and appointing independent 
directors, with the objective of ensuring that independent directors constitute 
the majority of the Boards.
• Expand access to and strengthen integration with platforms such as GovPay, 
the new government digital payment gateway, and LankaQR, to enhance 
financial inclusion and operational efficiency.
• Enhance credit quality through strengthened monitoring mechanisms and 
improved collection processes.
• Keep pace with the evolving regulatory landscape, implement necessary 
changes, and maintain transparent reporting practices.
• Develop new products to assist the existing customers and attract new ones.
• Expand financial services to underserved populations with the objective of 
promoting broader financial inclusion.
Ceylon Electricity Board and 
Successor Companies
• The six companies assigned with the functions of the CEB commenced their 
operations on March 09, 2026.
Ceylon Petroleum 
Corporation
• Provided approximately Rs. 57 billion in fuel subsidies to CPC and the other 
three petroleum market players during April–June 2026, including Rs. 41 billion 
to CPC, to mitigate the impact of global energy market disruptions on the day-
to-day lives of the general public and the overall economy.
SriLankan Airlines Ltd
• Restructured the USD 175 million Guaranteed Bonds due in June 2024, with 
the bond value finalized at USD 126.5 million, and the Cabinet of Ministers 
approved the absorption of the restructured bond value into the Government 
debt stock with effect from March 20, 2026.
• Provided USD 30 million in short-term funding to support the airline’s 
immediate financing requirements, in accordance with the Cabinet Decision 
dated May 04, 2026.
Sri Lanka Ports Authority
• Approval was granted for the Schemes of Recruitment (SORs) for non-
executive staff of SLPA, facilitating the formalization and streamlining of 
recruitment and staffing arrangements.
Source: SOEs and Department of Public Enterprises

Mid-Year Report 2026 · file page 51 printed page 42

42
TABLE 3.2 | Profit before Tax of 52 State Owned  Enterprises
Rs. Million
Enterprise
2024  
(Actual)
2025 
(Provisional)
2026 (Jan.-June) 
(Provisional)
1
Bank of Ceylon 
106,904
120,827
62,655
2
People’s Bank 
41,584
64,409
32,639
3
National Savings Bank 
26,268
44,493
22,572
4
State Mortgage & Investment Bank  
158
737
405
5
HDFC Bank 
64
10
205
6
Pradeshiya Sanwardena Bank
3,210
5,830
3,540
7
Employees' Trust Fund Board 
63,177
68,510
36,520
8
Sri Lanka Insurance Corporation Limited
3,546
6,891
2,623
9
National Insurance Trust Fund
16,442
9,391
12,833
10
Sri Lanka Export Credit Insurance Corporation
560
592
507
11
Agriculture and Agrarian Insurance Board
-3,182
-1,907
335
12
Ceylon Electricity Board**
141,605
-38,740
1,479
13
Ceylon Petroleum Corporation
34,188
36,461
29,156
14
Sri Lanka Ports Authority
46,349
57,246
34,505
15
National Water Supply and Drainage Board
23,833
31,604
16,171
16
Airport and Aviation Services (SL )Ltd
28,671
33,658
24,854
17
Sri Lankan Airlines Ltd*
-7,595
-23,211
-35,588
18
Sri Lanka Transport Board
547
4,312
-471
19
State Engineering Corporation
-773
-899
-182
20
Central Engineering Consultancy Bureau
607
395
60
21
State Development and Construction Corp.(a)
-1,217
-565
-193
22
Milco (Pvt) Ltd
-64
1,410
999
23
National Livestock Development Board
396
-143
287
24
Sri Lanka State Plantations Corporation
-69
-35
-60
25
Janatha Estates Development Board
-229
-222
-26
26
Kurunegala Plantations Ltd
415
635
206
27
Chilaw Plantations Ltd
219
650
272
28
Kalubovitiyana Tea Factory Ltd*
-7
84
16
29
Sri Lanka Cashew Corporation
14
17
1
30
Lanka Mineral Sands Ltd
-77
649
254
31
Lanka Phosphate Ltd*
465
459
65
32
Kahatagaha Graphite Lanka Ltd*  
-1
14
-5
33
Development Lotteries Board
4,197
7,487
5,343
34
National Lotteries Board
6,203
8,177
5,349
35
State Pharmaceuticals and Manufacturing Corp.
3,083
2,478
1,441
36
Sri Lanka Ayurvedic Drugs Corporation
183
276
31
37
State Pharmaceuticals Corporation
2,474
3,772
970
38
Sri Jayawardenepura General Hospital
552
363
723
39
Independent Television Network Ltd
3
62
-37
40
Sri Lanka Rupavahini Corporation
-247
-191
-166
41
Sri Lanka Broadcasting Corporation
-176
-203
-68
42
Sri Lanka Handicraft Board
25
35
6
43
State Timber Corporation
825
1,139
274
44
STC General Trading Company*
370
429
65
45
Lanka Sathosa Ltd
-776
-536
-89
46
State Printing Corporation
284
145
-185
47
Ceylon Fisheries Corporation(a)
-53
132
10
48
Ceylon Fishery Harbour Corporation
-101
-376
257
49
Hotel Developers Lanka PLC
-268
139
9
50
Lanka Sugar Company Ltd
-1,944
-3,193
-1,525
51
Ceylon Fertilizer Company Ltd(b)
118
 – 
 – 
52
Colombo Commercial Fertilizer Company Ltd(b) 
555
 – 
 – 
53
State Fertilizer Company Limited*
- 
723
234
Total
541,316
444,421
259,276
Sources: SOEs and Department of Public Enterprises
(a)Provisional 
(b) State Fertilizer Co. was incorporated by amalgamating these two companies
*2026 April – June
**For 2026, PBT is for the period from 01.01.2026 to 09.03.2026

Mid-Year Report 2026 · file page 52 printed page 43

43
Rs. Million
Actual
Enterprise
2024
2025
2026 (Jan.-June)
Levy 
33,190
47,332
8,923
National Savings Bank
- 
6,088
 – 
Bank of Ceylon
- 
5,000
 – 
People’s Bank
- 
2,000
1,550
Ceylon Petroleum Corporation
-
6,000
 – 
Telecommunication Regulatory Commission of Sri Lanka
9,000
3,000
 – 
National Water Supply and Drainage Board
-
200
 – 
State Timber Corporation
-
585
 – 
State Pharmaceuticals Manufacturing Corporation
300
779
 – 
National Insurance Trust Fund
2,919
4,973
602
Geological Survey and Mines Bureau
1,468
1,688
185
National Gem and Jewellery Authority
25
145
90
Board of Investment of Sri Lanka
928
1,150
 – 
National Lotteries Board
1,060
1,250
315
Sri Lanka Standards Institution
13
269
 – 
Sri Lanka Export Credit Insurance  Corporation
300
150
 – 
Central Engineering Consultancy Bureau
- 
15
 – 
Sri Lanka Tourism Promotion Bureau
500
1,000
2,000
Civil Aviation Authority
750
1,000
 – 
State Pharmaceutical Corporation
100
487
200
National Transport Medical Institute
850
280
 – 
Sri Lanka Bureau of Foreign Employment
- 
5,000
 – 
National Transport Commission 
250
300
250
Sri Lanka Tourism Development Authority
- 
275
250
Sri Lanka Land Reclamation and Development Authority
- 
100
 – 
Sri Lanka Ports Authority
607
2,000
3,000
National Medicine Regulatory Authority
880
751
150
Road Development Authority
1,749
2,128
 – 
Land Reforms Commission 
15
100
 – 
Condominium Management Authority 
 – 
10
15
National Institute of Business Management
85
30
 – 
Sri Lanka Ayurvedic Drugs Corporation
5
76
 – 
Post Graduate Institute of Management
4
30
28
Other SOEs
11,381
474
288
Dividends 
7,890
9,211
3,731
Sri Lanka Insurance Corporation Ltd
1,271
1,987
4
Airport and Aviation Services (Sri Lanka) (Pvt) Ltd
1,286
2,931
 – 
Lanka Mineral Sands Ltd
158
 – 
 – 
Lanka Phosphate Ltd
75
125
 – 
Lanka Leyland Ltd
- 
14
 – 
Rakna Arakshaka Lanka Ltd
75
 – 
111
Manthai Salt Ltd. (National Salt Ltd)
- 
30
40
Ceylon Fertilizer Ltd
15
 – 
 – 
Colombo Commercial Fertilizer Ltd
30
 – 
 – 
Paranthan Chemicals Company Ltd
131
33
 – 
STC General Trading Company 
50
116
 – 
Sri Lanka Telecom PLC
- 
227
680
De La Rue Lanka (Pvt) Ltd
1,324
494
 – 
Lanka Electricity Company Ltd
436
436
 – 
Lanka Industrial Estates Ltd
98
101
 – 
Ceylon Agro Industries
202
226
131
Plantation Companies
559
214
167
Lanka Thriposha Ltd
100
123
 – 
Other SOEs 
2,080
2,155
2,598
Total 
41,080
56,543
12,654
Sources: SOEs and Department of Public Enterprises
TABLE 3.3 | Levy/ Dividend Income from SOEs

Mid-Year Report 2026 · file page 53 printed page 44

44
CHAPTER 4
Foreign Financing and Management of Government Debt
4.1 Overview 
The debt position during the first half of 2026 
was characterized by a continued reliance 
on domestic financing, which accounted 
for around 82 percent of total borrowing in 
the period, mainly through Treasury bonds. 
The reduction in Treasury bill issuance 
also indicates a shift away from short-term 
financing. External debt remained diversified 
across multilateral, and bilateral creditors, 
while borrowing limit utilization remained 
moderate at 24.9 percent of the annual limit.
The external debt restructuring programme 
continued to make significant progress, 
with agreements covering 93 percent of the 
bilateral debt stock subject to restructuring 
concluded by end-June 2026. Foreign 
financing during the first half of 2026 
amounted to USD 913 million, with the IMF 
FIGURE 4.1 | Composition of External Debt by Creditor: End June 2026 (USD Billion)
Source: Public Debt Management Office                                                                                        
accounting for the largest share. Some 77 
percent of disbursements were directed 
towards 
budget 
support, 
highlighting 
the continued role of programme-related 
financing in meeting the Government’s 
financing needs.
4.2 Government Debt Stock 
The total government debt stock as at 
end June 2026 stood at Rs. 31,999 billion 
(equivalent to USD 95,047 million).  
The external debt of the Government as of 
end of June 2026 amounted to USD 38 billion 
(equivalent to Rs. 12,796 billion). Multilateral 
debt accounted for 39 percent of total 
government external debt, followed by 
commercial debt at 33 percent and bilateral 
debt at 28 percent. 
Multilateral  
Commercial  
Bilateral  
78
22
81
19
59
41
Multilateral: ADB + World Bank 
Multilateral: Other creditors 
Commercial: ISBs 
Commercial: Syndicated loans 
Bilateral: Non-Paris Club 
Bilateral: Paris Club 
28%
33%
39%

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45
On the domestic front, domestic debt stock 
stood at  Rs. 19,203 billion at the end of 
June 2026. Treasury bonds accounted for 84 
percent of the total government domestic 
debt stock, followed by Treasury bills at 12 
percent. 
4.3 Borrowing Limit Utilization
The total gross borrowing limit approved by 
Parliament for  fiscal year 2026 was Rs. 3,740 
billion of which Rs. 1,954 billion was allocated 
for the period from January 1 to June 30, 
2026. This  comprised domestic and foreign 
borrowing of, Rs. 1,590 billion and Rs. 364 
billion, respectively. 
The primary purposes of these borrowings 
were to finance debt service obligations 
and support development projects. As 
at the reporting date, Rs. 1,353.7 billion 
had been raised through the issuance of 
Treasury bonds domestically and Rs. 297.4 
billion through  external financing sources. 
Accordingly, approximately 82 percent of 
the total borrowings in the first half of 2026 
were sourced domestically, predominantly 
through Treasury bonds. Treasury bonds 
were used solely for domestic debt service 
payments. 
The apparent negative net issuance of 
Treasury bills, amounting to Rs. 720.9 billion 
during this period, indicates that repayments 
exceeded new issuances, suggesting that 
cash flow financing was used to reduce the 
outstanding volume of the Treasury bills.
Accordingly, total borrowing limit utilization 
as at end June 2026 stood at Rs. 930.2 billion, 
representing 24.9 percent of the annual 
borrowing limit for  2026. 
TABLE 4.1 | Gross Domestic Borrowing: January-
June 2026 
Instrument
LKR Billion
T- bonds
1,353.77
Source: Public Debt Management Office
TABLE 4.2 | Net Domestic Borrowing: January-
June 2026 
Instrument
LKR Billion
T-bills
-720.94
Source: Public Debt Management Office
4.4 Foreign Financing 
4.4.1 
Foreign 
Financing 
Commitments 
During the first half of 2026
The Government entered into a loan 
agreement 
with 
the 
International 
Development Association (IDA) of the World 
Bank for USD 50 million to finance the Digital 
Transformation Project. The  agreement was 
signed on  May 13, 2026 and carries an interest 
rate of 1.50 percent, with a total tenure of 25 
years, including a 5 year grace period. 
4.4.2 Foreign Financing Disbursements and 
Utilization During the period from January 
01 to June 30, 2026 
Total foreign loan disbursements amounted 
to USD 913.03 million. The largest share was 
recorded under the International Monetary 
Fund’s Extended Fund Facility, accounting 
for 76.1 percent of the total, followed by 
disbursements from the World Bank (10.5 
percent) and the Asian Development Bank 
(7.3 percent).
TABLE 4.3 | Disbursements of Foreign Loans: 
January 01, 2026 to June 30, 2026
Development Partner
Loan amount
(USD Million)
(Provisional)
Government of Japan
13,454,277.10 
Saudi Fund For Arab Economic 
Development
2,630,460.43 
Export Import Bank of India
7,572,739.89 
Asian Development Bank
66,323,966.92 
Asian Infrastructure Investment Bank
23,279,115.37 
World Bank
96,336,432.35 
Int. Fund for Agricultural 
Development
3,500,000.00 
International Monetary Fund EFF 23-
26 Pr
695,143,845.51 
OPEC Fund for International 
Development
4,790,373.40
913,031,210.97 
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 month end exchange rate 
of SDR apply to the end of previous month published by 
CBSL have been used. 
In terms of the allocation of disbursements 
by purpose, the largest share was allocated 
to the budget support sector, accounting

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46
for  77 percent of total disbursements, while 
the remainder was diversified among various 
economic sectors. The roads and bridges 
sector received the second largest allocation 
(7 percent), followed by ground transport 
(3 percent). The rest was allocated to other 
sectors, such as agriculture, health and social 
welfare, housing and urban development, 
humanitarian assistance, rural development, 
and water supply. 
FIGURE 4.2 | Disbursements by  Development 
Partners/Lending Agencies: January 01 to June 30, 
2026 (USD Million)
Source: Public Debt Management Office                                            
4.5 Debt Service Payments 
Total debt service payments from January 
1 to  June  30, 2026 amounted to Rs. 2,320 
billion (excluding Treasury bills maturities), of 
which Rs. 1,125 billion was for the principal 
payments and Rs. 1,195 billion was for  interest 
payments. Treasury bills redemptions in 
the first half of 2026, including inter   year 
maturities, amounted to Rs. 3,083 billion. 
The total  external debt service amounted 
to USD 1,253.9 million , of which USD 812.0 
million was for principal repayments and 
the remaining USD 441.9 million for  interest 
payments.
Domestic 
82%
External
18%
FIGURE 4.3 | Composition of Debt Service Payments 
Source: Public Debt Management Office                                            
As of end-June 2026, 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 when due, as specified in 
the contractual agreements, subject to any 
applicable grace period. However, overdue 
debt and debt service obligations that are 
in dispute are not  considered  external 
payment arrears for the purposes of IMF-EFF 
program monitoring. Arrears arising from 
the non-payment of debt service, for which 
a rescheduling or restructuring agreement 
is being sought are excluded from this 
definition. Arrangements are being made 
to meet payment requirements under both 
restructured 
and 
non-restructured 
loan 
agreements. 
4.6 
Progress 
of 
Debt 
Restructuring 
Programme
Sri Lanka has achieved substantial progress 
in restructuring its external debt following 
the declaration of the public debt service 
moratorium  in April 2022, with significant 
milestones  reached across both bilateral 
and commercial creditor categories.
On 26 June 2024, Sri Lanka finalized a debt 
treatment agreement with the members 
of the Official Creditor Committee (OCC), 
representing the country’s major bilateral 
lenders. On the same date, Sri Lanka 
also concluded Bilateral Debt Treatment 
Agreements with the Export-Import Bank of 
China for loans owed to that institution. These 
agreements were implemented through 
the signing of amendment arrangements. 
Further, progress was achieved on  December 
24, 2024 with the signing of amendment 
agreements with the China Development 
Bank, concluding that restructuring process 
as well. 
Meanwhile, Sri Lanka reached an agreement 
in principle with International Sovereign 
Bond (ISB) holders on  September 19, 
2024, regarding the restructuring of ISBs. 
The exchange of outstanding ISBs for new 
bonds was completed on  December 16, 
2024, with a participation rate of nearly 98 
percent, facilitating the conversion of almost 
all defaulted ISBs into new International 
Sovereign Bonds. 
23.66 
194.23 
695.14 
 -
 200
 400
 600
 800
Bilateral
Multilateral
IMF
US
o s

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47
Sri Lanka also made important gains in 
restructuring bilateral debt with Paris Club 
members. The signing of bilateral amendatory 
agreements with the Government of Japan, 
the Export-Import Bank of India, and the 
Government of the French Republic marked a 
series of key achievements. The restructuring 
process with Japan was concluded on  March 
24, 2025, followed by the signing of bilateral 
amendatory agreements with the Export-
Import Bank of India on  March 25, 2025 
(Lines of Credit) and  April 3, 2025 (Buyer’s 
Credit Agreements). Sri Lanka also signed 
bilateral amendatory agreements with the 
Government of the French Republic on June 
16, 2025, EXIM   Bank of Hungary on  July 
1, 2025, the Saudi Fund for Development 
on July 14, 2025 and the United Kingdom 
on August 22, 2025. Bilateral amendatory 
agreements were also signed with the 
Government of Australia on October 27, 
2025, and with the Government of Denmark 
on November 11, 2025. During the first half 
of 2026, the Government concluded bilateral 
debt restructuring agreements with the 
Governments of Belgium, Germany, Spain, 
and the Republic of Korea. Accordingly, 
as at  June 30, 2026, agreements covering 
93 percent of the bilateral debt stock  to 
be restructured had been concluded,  and 
the remaining portion is expected to be 
completed by the end of 2026. 
Following the successful finalization of loan 
agreements, Sri Lanka has resumed regular 
debt servicing to the respective creditor 
partners. 
Meanwhile, 
the 
restructuring 
process with creditors from 13 countries 
remains ongoing. The Debt Advisors, in 
coordination with the Ministry of Finance, 
Planning and Economic Development and 
the respective creditors, are continuing 
the necessary discussions and processes to 
finalize the restructuring arrangements. 
4.7 Government Guarantees 
As at  March 31, 2026, the total outstanding 
capital relating to Treasury Guarantees (TG) 
and Letters of Comfort (LC) amounted to 
Rs. 971,188.5 million. of this amount, LKR-
denominated TGs and LCs accounted for 
Rs. 473,013.3 million, while foreign currency-
denominated obligations, converted into 
LKR amounted to Rs. 498,175.2 million.
Foreign currency-denominated obligations 
therefore represented approximately 51.3 
percent of the total outstanding amount, 
while 
LKR-denominated 
obligations 
accounted for approximately 48.7 percent. 
Among the foreign currency exposures, 
USD-denominated obligations were the 
largest, at Rs. 401,661.7 million, followed by 
Yen-denominated obligations at Rs. 53,471.1 
million and Euro-denominated obligations 
at Rs. 43,042.4 million. Guarantee limit 
utilization as at June 30,2026 accounted for 
3 percent of average gross borrowing limit.
Rs. Million
S. No Name of the Bank or 
Institution
Name of Institution
 Issued 
Value as at 
30.06.2026
Outstanding 
Value as at 
30.06.2026 
1
Asian Development 
Bank
Lanka Electricity Company 
(Pvt) Ltd
16,833.12 223,880.44 
16,802.82 147,505.23 
CEB
50,499.35 
50,405.08 
Ceylon Electricity Board
134,664.92 
60,733.88 
Energy Activity Support 
Facility (CEB)
5,049.93 
2,730.33 
Regional Development Bank
16,833.12 
16,833.12 
2
Asian Infrastructure 
Investment Bank 
(AIIB)
Bank of Ceylon & People's 
Bank
60,599.21 60,599.21 
20,199.74 
20,199.74 
3
Bank of Ceylon
Building Materials 
Corporation Ltd
500.00 471,614.99 
500.00 255,530.29 
Ceylon Electricity Board
4,540.00 
51.18 
TABLE 4.4 | The Outstanding List of Treasury Guarantees and Letters of Comfort Issued by the General Treasury 
up to June 30, 2026

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48
Rs. Million
S. No Name of the Bank or 
Institution
Name of Institution
 Issued 
Value as at 
30.06.2026
Outstanding 
Value as at 
30.06.2026 
Ceylon Petroleum 
Corporation
220,000.00 
92,203.64 
General Sir John Kotelawala 
Defence University
85.00 
3.26 
Janatha Estates 
Development Board
200.00 
28.55 
Lanka Coal Company (Pvt) 
Ltd
49,500.00 
34,774.77 
National School of Business 
Management Limited
8,600.00 
4,150.00 
National Water Supply & 
Drainage Board
65,793.15
31,190.45 
Road Development 
Authority
118,970.03 
89,337.84 
State Development and 
Construction Corporation
1,126.81 
990.61 
State Engineering 
Corporation
2,300.00 
2,299.99 
4
China Development 
Bank
National Water Supply & 
Drainage Board
118,643.13 118,643.13 
63,346.38 
63,346.38 
5
China National 
Chemical 
Engineering No.14 
Constrution Co. Ltd
Ceylon Petroleum 
Corporation
14,737.39 
14,737.39 
6,642.35 
6,642.35 
6
Commercial Bank
National Water Supply & 
Drainage Board
968.36 
968.36 
363.08 
363.08 
7
DFCC Bank
National Water Supply & 
Drainage Board
6,026.24 
11,026.24 
2,701.08 
6,179.34 
Road Development 
Authority
5,000.00 
3,478.26 
8
Exim Bank of India
National Water Supply & 
Drainage Board
88,232.46 88,232.46 
54,168.96 
54,168.96 
9
Export Development 
Board
Bank of Ceylon and Peoples 
Bank
60.00 
60.00 
60.00 
60.00 
10
Hatton National Bank Airport & Aviation Services 
(Sri Lanka) Limited
4,000.00 20,507.22 
4,000.00 
10,466.19 
National Water Supply & 
Drainage Board
16,507.22 
6,466.19 
11
Hongkong & 
Shanghai Banking 
Co.Ltd.
Airport & Aviation Services 
(Sri Lanka) Limited
14,859.58 14,859.58 
9,928.17 
9,928.17 
12
Industrial And 
Commercial Bank of 
China Limited
Ceylon Electricity Board
14,130.53 
14,130.53 
8,931.65 
8,931.65 
13
ING Bank, NV of 
Netherlands
National Water Supply & 
Drainage Board
31,844.90 31,844.90 
27,379.46 
27,379.46 
14
International 
Air Transport 
Association
Sri Lankan Airlines Limited
3,905.28 
3,905.28 
3,905.28 
3,905.28 
15
Japan International 
Coorporation 
Agency (JICA)
Airport & Aviation Services 
(Sri Lanka) Limited
154,463.05 154,463.05 
53,471.12 
53,471.12 
16
National 
Development Bank 
PLC
National Water Supply & 
Drainage Board
20,306.30 20,306.30 
11,883.47 
11,883.47 
17
National 
Development Bank 
PLC
National Water Supply & 
Drainage Board
1,074.13 
1,074.13 
991.43 
991.43 
18
National Savings 
Bank
Ceylon Electricity Board
5,000.00 147,098.87 
2,500.00 
118,920.71

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49
Rs. Million
S. No Name of the Bank or 
Institution
Name of Institution
 Issued 
Value as at 
30.06.2026
Outstanding 
Value as at 
30.06.2026 
General Sir John Kotelawala 
Defence University
33,896.09 
26,632.64 
National Water Supply & 
Drainage Board
32,710.61 
24,304.24 
Road Development 
Authority
75,492.17 
65,483.83 
19
Paddy Marketing 
Board
Co-operative Wholesale 
Establishment
880.00 
880.00 
729.60 
729.60 
20
People's Bank
Ceylon Electricity Board
6,500.00 113,483.90 
4,535.34 
78,544.40 
Ceylon Petroleum 
Corporation
2,600.72 
1,430.81 
Ceylon Shipping 
Corporation Ltd
24,209.54 
15,991.46 
National System Operator 
Private Limited
20,560.00 
20,524.25 
National Water Supply & 
Drainage Board
4,563.98 
2,313.09 
Road Development 
Authority
53,784.66 
33,241.94 
Sri Lanka State Plantation 
Corporation
100.00 
59.12 
State Printing Corporation
1,165.00 
448.39 
21
Reserve Bank of 
India
Central Bank of Sri Lanka
370,809.59 
370,809.59 
67,810.52 
67,810.52 
22
Sampath Bank
Road Development 
Authority
14,500.00 14,500.00 
8,568.18 
8,568.18 
23
UniCredit Bank 
Austria AG
National Water Supply & 
Drainage Board
19,425.14 
19,425.14 
15,662.96 
15,662.96 
Grand Total
1,917,050.71 1,917,050.71 
971,188.51 971,188.51 
Source: Public Debt Management Office