2026 Budget Focuses on Growth, Debt Sustainability 📈

• Budget Objectives: Treasury Secretary Dr. Harshana Suriyapperuma highlighted that the 2026 National Budget focuses on driving growth, advancing development, and achieving debt sustainability. Key strategies include expert diversification, inclusive growth, strengthening the production economy, and promoting digitisation. • Fiscal & Debt Status: Fiscal indicators are "very positive" (Dr. De Mel), showing controlled expenditure and revenue exceeding targets in 2024 and 2025 (VAT contributed a 2.8% increase). Repayments are currently on schedule, and confidence was expressed in meeting 2028 commitments, provided fiscal discipline and higher revenue are maintained. • Real Economy Concerns: Dr. Nishan De Mel warned that real indicators are "troubling": employment is at a 20-year low, real incomes remain below 2018 levels, and poverty has doubled since 2019. Monetary shortcomings (e.g., 6 consecutive quarters of missed inflation targets) are eroding fiscal gains. • Key Strategies: • Tax Net: Measures like a reduced tax threshold, e-invoicing, and a modern tax audit scheme are being introduced to broaden the tax base. • FDI & Exports: Government seeks to increase foreign direct investment (FDI) via stability and efficiency, including a single window for trade facilitation. Boosting exports through new markets and product diversification is deemed crucial. • Development Focus: Stressed need for zero corruption, comprehensive digitisation, and focused development of the education, transport and SME sectors. • Caution: Experts advised against taking on additional foreign debt for unproductive purposes and proposed establishing a 'bad bank' to absorb non-performing assets.