🇱🇰 Fiscal Test Ahead: 2026 Revenue Targets "Ambitious" & Spending Rigid, Warns Economist 📈

Economist Dr. Roshan Perera has cautioned that while Budget 2026 sustains macroeconomic stability, achieving its fiscal goals—especially revenue—will be challenging, urging continued discipline after the IMF program. • Fiscal Discipline: Commends the plan for a fourth consecutive primary surplus in 2026, but warns that sustaining fiscal prudence post-IMF program is the "real test" of policy credibility. • Revenue Concerns: The 2026 revenue targets are seen as "ambitious" with few new tax measures. • Questions the sustainability of import-based tax revenue (e.g., vehicle imports) which boosted 2025, due to policy curbs (SSEL/LTV). • Cautions against overestimating near-term revenue gains from tax administration upgrades (e-invoicing, RAMIS 3.0) due to implementation complexity. • Notes the persistent tax mix imbalance (current 25:75 Direct:Indirect) disproportionately burdens low-income households. • Expenditure Rigidity: Urges rationalising recurrent spending. • The Wage bill is projected to remain high at 3.8% of GDP in 2026. • Questions the need for recruiting 75,000 new public servants given the existing 1.4-1.5 million civil service workforce. • Social Impact: Macro-stabilisation benefits are yet to reach ordinary citizens; growth is weak, and poverty remains above 20%. • Total social transfers (including Aswesuma) account for less than 1% of GDP, underscoring limited fiscal prioritisation for vulnerable groups.