2026 budget attuned to IMF programme to be unveiled today

Call for Govt. to build on stability to achieve economic transformation

Economy has strengthened whereas inflation has returned to single digits

Sri Lanka now has foreign reserves amounting to US $ 6. 1 billion. Also, the country achieved a primary surplus of 2.3 percent

With the lifting of import restrictions on vehicles, the government was able to achieve its revenue target of nearly 15 percent of the GDP

The IMF will unlock the next US $ 347 million tranche contingent upon the 2026 budget

The economy grew by 4.8 during the first half of this year

By Kelum Bandara 

President Anura Kumara Dissanayake will present his government’s budget for 2026 in Parliament today, the second by him upon election to office, and it is expected to be aligned with the International Monetary Fund (IMF) economic reform agenda.  

After confronting the worst-ever economic crisis in 2022, Sri Lanka struck a programme with the IMF. Since then, the country has prepared its national budgets attuned to achieve targets envisaged under the IMF Extended Fund Facility.  

The economy has strengthened whereas inflation has returned to single digits. It is remaining low at the moment. Sri Lanka now has foreign reserves amounting to US $ 6. 1 billion. Also, the country achieved a primary surplus of 2.3 percent. With the lifting of import restrictions on vehicles, the government was able to achieve its revenue target of nearly 15 percent of the GDP.   

Sri Lanka is drafting tax laws to attract foreign investment, an essential component of the reforms for securing the sixth IMF tranche of $347 million by year-end. The sixth tranche brings the total money unlocked under the lender’s nearly $3 billion support programme to the island nation to about $2.04 billion.  

However, President Anura Kumara Dissanayake, will present his government’s second budget today when the country is at a critical juncture between hard-won stabilization and the promise of sustainable growth.   

The government is now required to build on hard-won stability to achieve economic transformation.  

The IMF has already stressed that the 2026 Budget should be in line with programme parameters to continue building fiscal space on the back of strong revenue measures and prudent spending execution. This requires sustained efforts to improve tax compliance, broaden the tax base, and tackle revenue leakages by strengthening the tax exemption frameworks. Enhancing public financial management, avoiding the reemergence of expenditure arrears, and promoting high-quality and efficient public expenditure, including by addressing capital spending under-execution, will contribute to safeguarding fiscal discipline and transparency, Evan Papageorgiou who leads the IMF mission team here said at the conclusion of his recent visit.  

The IMF will unlock the next US $ 347 million tranche contingent upon the 2026 budget. The economy grew by 4.8 during the first half of this year. It was a five- percent growth last year.