Govt. Signals Tighter Spending with 2027 Budget Call 📉

The Sri Lankan government has officially commenced preparations for the 2027 Budget under National Budget Circular 02/2026. Emphasizing strict fiscal consolidation, the Treasury has imposed binding expenditure ceilings on ministries, leaving little room for spending beyond ongoing commitments. Key Fiscal Targets • Primary Surplus: Targeted to rise to 2.6% of GDP in 2027, up from 2.1% in 2026. • Budget Deficit: Projected to contract to 4.5% of GDP in 2027, down from 5.6% in 2026. Top Ministry Allocations (Baseline Ceilings) • Public Administration & Local Govt.: Rs. 722 Bn (Largest allocation) • Provincial Councils: Rs. 655 Bn • Health and Mass Media: Rs. 595 Bn • Transport, Highways & Urban Dev.: Rs. 491 Bn • Finance, Planning & Economic Dev.: Rs. 458.1 Bn • Defence: Rs. 447 Bn Stricter Project Scrutiny & Priorities • New Projects: Banned from baseline allocations. Proposals must be submitted separately to the Public Investment Committee for rigorous evaluation under the Public Financial Management Act. • National Priorities: Priority will be granted to initiatives driving economic growth, exports, digital transformation, climate resilience, and public service efficiency. • Cost Management: Chief Accounting Officers must prioritize non-discretionary obligations (salaries, pensions, utilities) within existing limits to avoid mid-year supplementary demands. • Digitization: All estimates must be processed via the Integrated Treasury Management Information System (ITMIS). _Note: Budgets are prepared based on provisional forward baseline estimates. All ministry submissions are due by 31 July 2026._