📈 Sri Lanka 2027 Budget Preview: Focus on Sustainable Growth & Relief

Sri Lanka prepares to present its 2027 Budget on 12 November, aiming to transition from post-crisis macroeconomic stabilization to sustainable economic growth and household relief. • Overall Economic Outlook • Real GDP grew 4.7% in 1H 2026; projected at 4.4% in 2026 and 4.2% in 2027 (World Bank data). • Fiscal achievements in 2025 recorded a primary surplus of 5.4% of GDP (exceeding the 2.3% IMF target) and total revenue/grants at 16.7% of GDP. • Total public expenditure in 2025 reached 19.0% of GDP, with capital expenditure at ~3.0%. • Key Sectors & Industry Expectations • SME Sector: Core priority for reform; calls for simplified tax compliance, broader turnover thresholds, and improved credit access. • Export-Oriented & Manufacturing: Focus on corporate tax incentives, investment allowances, and retained-earnings reinvestment for higher value addition. • Tourism, ICT/BPM, & Agriculture: Targeted for performance-linked tax exemptions, technology adoption, food security, and modern infrastructure support. • Tax Policy & Public Relief Priorities • Personal Income Tax: Potential threshold adjustments and simplified filing to ease living costs. • VAT & SSCL: Pressure to rationalise 18% VAT and 2.5% Social Security Contribution Levy to improve business cash flow and lower consumer prices. • Revenue Sustainability: Strategy shifting towards RAMIS 2.0 digital administration and broader compliance rather than higher rate hikes.