📊 Budget 2027: Treasury Prioritizes Reforms and Growth Over Tax Cuts

• Economic Fiscal Progress: Revenue-to-GDP ratio rose from ~7% to 16%. Interest payments dropped to 40% of revenue (down from 80% two to three years ago). Rs. 96 Bn in SME lending allocated this year to support micro, small, and medium enterprises. • Tax Administration & Digital Systems: Improved IRD systems and digitisation are generating Rs. 120 Bn annually in positive cash flow without rate hikes. Average VAT refund processing time reduced to 29 days (down from legal limit of 45 days). Digital invoicing rollout completed Phase 1 (exporters) and user testing Phase 2 (36,000 VAT-registered suppliers). • Long-Term Growth Targets: Partnering with the World Bank on a strategy targeting 7% economic growth to double GDP from US$ 100 Bn to US$ 200 Bn. Focus areas include connecting local SMEs to global markets (200M to 2B consumer base) and expanding regional competitiveness. • Structural Reforms: Continuing legislative updates to close revenue leakages. Highlights include a 95% score on the WTO Global Trade Facilitation Index (April), successful Tourist VAT Refund Scheme implementation, and 99% creditor approval for the SriLankan Airlines restructuring.