President Anura Kumara Dissanayake presented the Appropriation Bill for the 2026 financial year in Parliament today.
The total estimated government expenditure for the period from January 1 to December 31, 2026, is Rs. 4,434 billion.
Prime Minister Harini Amarasuriya tabled the Appropriation Bill, outlining the government’s proposed expenditure for the upcoming year.
In his budget speech, President Dissanayake stated that the government aims to keep inflation below 5%, noting that foreign exchange reserves remain stable and that exports and remittances are strong.
He emphasized that while previous administrations projected a return to 2019 economic levels by 2029, the current government expects to restore the pre-crisis economy by the end of 2025.
The President announced that Aswesuma beneficiaries will be reviewed in 2026 to ensure the program remains free from political influence.
Sri Lanka’s foreign direct investment has reached USD 823 million by September 2025, reflecting renewed investor confidence, he said, adding that official reserve assets are expected to approach USD 7 billion by year-end.
The President further noted that USD 210 million in debt from SriLankan Airlines will be restructured this year and that the government will soon introduce an e-procurement system.
An expert committee will also be appointed to draft a code of ethics for the judicial service.
The President revealed that a digital assets system will be introduced in 2026, while import revenue has increased by USD 2 billion by September, with expectations for similar growth by December.
The government anticipates achieving 7% economic growth over the medium term, he added.
Sri Lanka aims to reduce its debt-to-GDP ratio to below 90% by 2032, and by October 31, Letters of Credit worth USD 1,333 million have been issued for vehicle imports valued at USD 1,363 million.
This year’s debt servicing totals USD 2,435 million, with USD 1,948 million repaid by September and the remainder scheduled for December. This marks an increase of USD 761 million compared to last year.
The unemployment rate has declined from 4.5% in early 2024 to 3.8% in early 2025.
The President said the government targets to increase state revenue to 15.3% of GDP by 2026, with a long-term goal of 20%, while maintaining a 60:40 ratio between direct and indirect taxes.
The Strategic Development Projects Act and the Port City Commission Act will be amended at the beginning of 2026 to streamline foreign investments.
A National Single Window (NSW) framework for trade is being developed, with Rs. 2,500 million allocated this year.
Two technical institutes in Kurunegala and Galle that were previously abandoned will be reopened for private sector investment after settling outstanding debts.
Two new IT zones will be established in Digana and Nuwara Eliya under the Board of Investment (BOI), with residence visas to be granted to investors based on their contributions.
Funds have been allocated to provide concessionary loans up to Rs. 50 million for small and medium-scale entrepreneurs, with Rs. 5,900 million allocated for these loans and Rs. 800 million for a Sustainable Agricultural Loan Fund.
The government plans to convert state bungalows into profitable ventures under Public-Private Partnerships, with 900 buildings identified. Haputale will also be developed as a key tourist destination.
An allocation of Rs. 1,000 million has been made to develop Hingurakgoda, Sigiriya, and Trincomalee domestic airports and to expand Jaffna Airport.
The government will restart halted projects at Katunayake Airport within the first half of next year.
A Digital National Identity Card will be issued by March 2026, with data management handled by a Sri Lankan company to ensure data sovereignty.
All government payments will move to a digital payment system, with no service charges for online transactions.
A broadband voucher will be introduced for children from Aswesuma beneficiary and low-income families, providing access only to approved educational websites.
The Agni Fund, with Rs. 1,500 million allocated, will support startups under the Digital Economy Ministry.
A five-year tax exemption will be granted for digital communication towers, with 100 towers to be constructed.
The Clean Sri Lanka Initiative has been allocated Rs. 6,500 million.
The government plans to establish a virtual economic zone to promote investment, and discussions are underway with the BOI.
Allocations include Rs. 2,000 million for the ‘Ratama Ekata’ program, including urgent prison reforms, and Rs. 1,000 million to improve service accessibility for the differently-abled community.
Differently-abled individuals employed in the private sector will receive an allowance of up to Rs. 15,000 (50% of salary) for two years, with Rs. 500 million allocated.
An additional Rs. 500 million has been allocated to strengthen day-care centers for children with autism and other special needs.
Education support includes Rs. 50 million for differently-abled children, Rs. 2,500 increases in Mahapola and student allowances, and a Rs. 2,500 increase for teacher training college students.
A Rs. 1,500 million pilot project will establish primary healthcare centers nationwide.
Allocations include Rs. 11,000 million for medical faculties and Rs. 200 million for a state-of-the-art 16-storey cardiac hospital to be completed within three years.
The daily wage for estate workers will rise from Rs. 1,350 to Rs. 1,750 by January 2026, with Rs. 5,000 million allocated.
Concessional housing and pension schemes will be introduced for migrant workers, supported by the Sri Lanka Bureau of Foreign Employment (SLBFE) with Rs. 2,000 million.
The Suwa Seriya Ambulance Service will receive Rs. 4.2 billion, while wildlife conservation efforts will be strengthened with allocations for electric fences, vehicles, and food allowances.
Cultural, women’s welfare, and self-employment initiatives have also received budgetary allocations, including Rs. 240 million for women entrepreneurs, Rs. 200 million for women’s welfare, and Rs. 50 million to promote drama and performing arts.
The Sri Lanka Broadcasting Corporation, Rupavahini Corporation, and ITN will receive government support for operational costs, with Rs. 100 million for journalist training and scholarships.
Infrastructure allocations include Rs. 3,000 million for coconut cultivation, Rs. 600 million for northern expansion, Rs. 3,000 million for the Badalgama Dairy Factory, and Rs. 250 million for the Dambulla Cold Storage facility.
The Irrigation sector will receive Rs. 91,700 million, and Rs. 500 million will be spent to upgrade fishing wharf infrastructure.
A medium-term flood mitigation framework has been allocated Rs. 250 million, while Rs. 85,700 million has been allocated for drinking water projects.
Public transport improvements total Rs. 67,200 million, including 600 new SLTB buses and five new DMUs for the railways.
A total of Rs. 342 billion is allocated for road development, including major expressway projects and feasibility studies.
A Rs. 330 million feasibility study will examine a link between the Port City end of the Port Access Elevated Highway and Marine Drive, aimed at easing congestion near the Lotus Roundabout.
The Energy Transition Act will be introduced to modernize power transmission and support green energy sectors.
The government plans to expand Colombo Port and begin construction of the second phase of Bandaranaike International Airport in early 2026.
For local government and waste management, Rs. 8,000 million has been allocated to procure 700 transport machines, Rs. 900 million for waste management, and Rs. 100 million for a pilot pet care project in Kesbewa and Piliyandala.
The housing development sector receives major funding, including Rs. 3,000 million for the “A Place of Your Own” programme, Rs. 15,000 million for urban housing, and Rs. 4,290 million (with Indian support) for estate workers.
State sector reforms will reorganize 21 institutions, merge 14 research bodies, and liquidate 13 outdated entities.
Rs. 2,000 million will support housing for individuals formerly in children’s detention centres and at-risk families.
Allocations include Rs. 11,000 million to settle unpaid dues of 10 state-owned enterprises, Rs. 12,500 million for essential government vehicles, and Rs. 250 million to increase railway gatekeepers’ allowances.
Teachers and principals will receive allowance increases of Rs. 1,500, and Agrahara contributions will rise. Festival advances increase to Rs. 15,000, and distress loans to Rs. 400,000.
To broaden the tax base, the VAT and Social Security Contribution Levy threshold will be reduced from Rs. 60 million to Rs. 36 million from April 1, 2026.
The Special Commodity Levy on imported coconut and palm oil will be removed, applying the general tax structure, including VAT.
The number of registered taxpayers has increased by 300,000 as of September 2025.
Permanent appointments will be granted to employees with over six months’ service, meeting the criteria of Public Administration Circulars 25/2014 and 29/2019.
The government plans to revise Customs Import Duty rates under the National Tariff Policy and eliminate para-tariffs gradually.
The Social Security Contribution Levy on vehicle sales will now be collected at the point of import, manufacture, or initial sale.
From April 1, 2026, CESS on imported fabric will be removed, and VAT imposed for parity with local producers.
A modern tax audit framework will be introduced from January 2026 to improve transparency and reduce corruption.
The government is developing a national e-invoicing system linking taxpayers’ ERP systems and RAMIS, expanding in phases to VAT-registered firms and POS machines for real-time tracking.
A new office complex will be built for the Department of Inland Revenue at a cost of Rs. 2,000 million, to consolidate operations and improve digital efficiency.
Amendments to the Telecommunications Tax Act will ensure bad debts and recoveries are reflected in levy payments.
Legal provisions will allow tax authorities to share information with enforcement agencies under the AML/CFT framework, strengthening measures to prosecute tax-related crimes.
