Sri Lanka Budget Targets Growth Beyond Crisis Recovery as IMF Exit Nears

President Anura Kumara Dissanayake presented the Sri Lanka budget on Thursday, aiming to move the economy from crisis recovery to growth as the country prepares to complete its IMF programme.

What the Sri Lanka Budget Aims to Do

“The aim of this budget is to move from recovery to transformation,” Dissanayake said, adding that the government has enough liquidity to meet its debt repayments. The World Bank forecasts growth of 4.4 per cent this year, foreign exchange reserves have been rebuilt to $6.9 billion, and Fitch upgraded Sri Lanka to B-minus from CCC-plus in September. Inflation, however, rose to 8.3 per cent in October from 2.2 per cent in March.

IMF Programme and Debt

The $2.9 billion IMF programme is expected to end in March. Debt repayments will total $2.9 billion in 2027 and $3.5 billion in 2028, with foreign debt repayments resuming in 2028 at about $1.4 billion. Debt is projected at 92.9 per cent of GDP in 2026, down from 114.2 per cent in 2022, and the government expects it to fall to 87 per cent by 2032 under the IMF programme.

Fiscal Targets

The medium-term strategy for 2027 to 2031 targets a primary surplus of 2.3 per cent of GDP, total revenue of about 15.5 per cent and tax revenue of 14.2 per cent. For 2027 the budget targets a 2.6 per cent surplus, above the IMF’s 2.3 per cent requirement.

Energy Costs and Investor View

Fuel spending reached $4.4 billion in the first nine months of 2026, as much as in all of 2025. Plans include expanding the country’s only refinery to 100,000 barrels per day and building more fuel storage and pipelines. An analyst at Gramercy said investors will be watching the balance between growth and fiscal prudence, since this is the first budget not focused solely on crisis management.

At a Glance

• Budget unveiled by President Dissanayake on November 12
• IMF programme of $2.9 billion due to end in March
• Debt projected at 92.9 per cent of GDP in 2026, down from 114.2 per cent in 2022
• 2027 surplus target of 2.6 per cent, above the IMF’s 2.3 per cent

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