📈 Sri Lanka Records Strong Fiscal Surplus in Jan-Feb 2026

Sri Lanka’s fiscal position strengthened significantly in the first two months of 2026, driven by robust revenue growth and disciplined spending. • Overall Fiscal Performance: The primary surplus expanded by 66.1% YoY to reach Rs. 545.42 Bn. Notably, the overall budget balance swung to a surplus of Rs. 169.71 Bn, a nearly 296% turnaround from the Rs. 86.62 Bn deficit recorded in 2025. • Revenue Mobilization: Total revenue and grants surpassed the Rs. 1 Tn mark, rising 35.5% YoY. Tax Revenue: Increased 35.8% to Rs. 959.9 Bn. Non-Tax Revenue: Rose 32.8% to Rs. 71.26 Bn. • Expenditure Trends: Growth was contained at just 1.6% YoY (Total: Rs. 861.45 Bn), despite pressures from post-Cyclone Ditwah reconstruction. Recurrent Expenditure: Rs. 802.91 Bn (+1.5%). Capital Expenditure: Rs. 58.53 Bn (+4.2%). • Economic Context: This consolidation supports Sri Lanka's progress toward the next IMF Extended Fund Facility (EFF) tranche. However, risks remain regarding global energy prices and Middle East tensions. Sustaining revenue mobilization is critical to offset reconstruction costs and preserve these fiscal gains.