📈 Sri Lanka Economic Summary: The Reality of 2026

The "new era" of governance faces a transition from campaign rhetoric to "structural compliance." Despite promises of radical change, the National People's Power (NPP) administration has largely maintained established macroeconomic frameworks to ensure stability. • Overall Fiscal Figures GDP Growth: Projected at 3.1% for 2026, following a recovery phase. Budget 2026: Targets total revenue of Rs. 5,300 Bn against an expenditure of Rs. 7,057 Bn. Primary Balance: A surplus goal of 2.3% of GDP is maintained to meet IMF debt sustainability targets. Public Debt: Projected to decline to 96.8% of GDP by year-end, down from 114.2% in 2022. • Sector & Policy Breakdowns Energy: Despite pledges to slash tariffs by 30%, electricity rates remain tied to global oil prices and a depreciating Rupee; CEB is managing a Rs. 22.7 Bn revenue requirement for Q1 2026. Taxation: VAT and SSCL registration thresholds will be lowered from Rs. 60 Mn to Rs. 36 Mn annually, effective April 1, 2026, to broaden the tax base. Apparel & Manufacturing: Sector faces pressure from global tariff volatility and the requirement to reapply for EU GSP+ benefits in 2026. Accountability: Anti-corruption efforts have shifted toward "performative accountability" with high-profile arrests, but have yet to recover significant "stolen assets" to plug the budget deficit. • Top Challenges External Shocks: Recovery was hampered by Cyclone Ditwah, causing an estimated US$ 4.1 Bn in damage. Debt Servicing: Sri Lanka continues to service foreign debt, with full repayments scheduled to resume in 2028.