📈 Govt. Signals Stronger Capital Market Push in 2027 Budget

• Macroeconomic Shift & Growth: Sri Lanka is moving from stabilization to transformation, allocating Rs. 2 t for capital expenditure (roads, logistics, social infrastructure) to bridge the domestic savings-investment gap and boost local & foreign investment. • Fiscal & Tax Policy: Revenue mobilization is ahead of schedule—surpassing the 16% of GDP mark by end-2025 (target was 15.4% by 2030). Once targets are secured, the Govt. plans to reset the tax structure, with potential cuts to indirect taxation alongside corporate and individual tax updates. • Capital Market Reforms: Most of SEC’s 12 development proposals accepted, with key initiatives featuring in the upcoming 12 Nov 2026 Budget and larger visibility planned for the 2027 Budget. Efforts focus on eliminating market manipulation and info asymmetry to protect retail savers. • SOE Restructuring: Govt. to exit ordinary commercial sectors like trading & hotels. A new SOE Act will create autonomous corporate entities, allowing diversification, mergers, or private sector collaboration while retaining key utilities to prevent market distortion. • Monetary & External Sector: Exchange rate flexibility maintained despite speculative pressure, which temporarily raised the import bill by ~$2.5 Bn/month. Inflation and interest rates expected to drop long-term, though Middle East tensions and global trade friction remain external risks.