📈 Sri Lanka Budget Surplus Widens to Rs. 197.3 Bn through May on Robust Revenue Growth

Sri Lanka’s fiscal position strengthened significantly during the first five months of 2026, reversing a Rs. 236.63 Bn deficit from the same period last year into a substantial overall budget surplus, driven by strong revenue collection outpacing expenditure. Overall Figures & Revenue: • Overall Budget Balance: Recorded a surplus of Rs. 197.34 Bn (vs. a deficit of Rs. 236.63 Bn in Jan-May 2025). • Total Revenue & Grants: Increased by 30.6% YoY to Rs. 2.54 Tn. • Tax Revenue: Rose 23.9% YoY to Rs. 2.32 Tn, forming the bulk of state income. • Non-Tax Revenue: Jumped 54.2% YoY to Rs. 211.84 Bn. Grants fell to Rs. 1.34 Bn. Expenditure Breakdown: • Total Expenditure: Grew moderately by 7.3% YoY to Rs. 2.34 Tn, showing continued fiscal discipline. • Recurrent Expenditure: Increased by 5.5% YoY to Rs. 2.11 Tn. • Capital Expenditure: Climbed 29.3% YoY to Rs. 226.83 Bn, reflecting accelerated public investment. Key Program Indicators: • Primary Surplus: Expanded by 52.3% YoY to Rs. 1.13 Tn (vs. Rs. 742.92 Bn in 2025), a key metric under Sri Lanka’s IMF-supported reform program. • Outlook: Following temporary fiscal easing in 2026, the government aims to restore the primary surplus target to 2.3% of GDP by 2027. The IMF emphasizes structural improvements in tax compliance, broader tax bases, and faster execution of public spending alongside state-owned enterprise reforms to safeguard macroeconomic stability. (Based on Central Bank of Sri Lanka data)