Govt. Beats 2025 Fiscal Expectations with Record Surplus 📈

Sri Lanka’s fiscal position strengthened significantly in 2025, driven by a surge in tax collection and disciplined spending, according to data from the Finance Ministry and CBSL. • Overall Fiscal Performance: The Government recorded a record primary surplus of Rs. 1.78 Trillion, over 2.7 times the 2024 surplus. The overall budget deficit narrowed by 64.5% YoY to Rs. 724.4 Bn, reaching only 33% of the initial budgeted estimate. • Revenue & Grants: Total revenue rose 35.4% YoY to Rs. 5.5 Trillion. This was anchored by tax revenue of Rs. 5.05 Trillion, which grew 36.3% YoY and reached 110% of its target. • Expenditure Breakdown: Recurrent expenditure declined 1.6% YoY to Rs. 5.26 Trillion, reflecting tight control over spending and interest payments. Capital expenditure rose 26.7% YoY to Rs. 1.0 Trillion, particularly in infrastructure and provincial council grants, though it remained below the budgeted allocation. • Macroeconomic Impact: The budget deficit narrowed to 6.7% of GDP in 2025, compared to 9.9% in 2024. A sharp decline in interest payments (down 57.1% YoY in December) and strong revenue from non-tax sources, such as government-owned assets, provided a vital buffer to the national economy.