Deficit Widens After Rs. 500bn Supplementary Spending
- CNL Reporter
- January 1, 2026
- News, Political
- parliamentary approva, Sri Lanka
- 0 Comments
Sri Lanka’s fiscal outlook for 2026 has weakened following parliamentary approval of a Rs. 500 billion Supplementary Estimate to fund post-Cyclone Ditwah recovery, according to a Finance Ministry report. The budget deficit for 2026 has been revised up to 6.5% of GDP, from an earlier estimate of 5.1%, marking a sharp deterioration from the 4.5% deficit projected for 2025.
The primary surplus is now expected to fall to 1% of GDP in 2026, down from 3.8% in 2025. Total expenditure has risen to nearly 22% of GDP, driven by higher capital spending on reconstruction, while revenue remains unchanged at about 15.4% of GDP.
The IMF has warned that Sri Lanka’s debt sustainability risks remain high and stressed the need for efficient, well-targeted emergency spending. The Government says recovery costs will be met through existing cash buffers while maintaining borrowing limits set in the 2026 Budget.
