Sri Lanka's 2026 Budget Strategy: Tax Base Expansion & Rs. 1 T Cash Buffer 🇱🇰📈

• Deputy Minister Abeysinghe confirms Budget 2026 avoided aggressive tax hikes, citing the existing heavy burden on households and businesses. • Fiscal & Tax Policy: Revenue exceeds IMF targets, but the key challenge is the narrow taxpayer base (1m-1.3m non-filers). The strategy is to widen the base, aiming to eventually lower consumption taxes (like VAT) through improved efficiency. • Treasury Buffer: The Treasury cash buffer exceeds Rs. 1 t for the first time, which is being used to help manage/hold interest rates at 8%. • SOE Turnaround: Losses have narrowed significantly. CEB made a profit of Rs. 144 Bn last year, with the goal now to maintain a break-even position. • Investment Reform: A new Strategic Investment Act will introduce rules-based incentives, removing political discretion. Approvals will be streamlined via Single Windows to cut the current setup time of nearly two years. • Infrastructure & Energy: Infrastructure spending is set to accelerate. Renewables are central to plans to cut electricity costs by one third within five years.