• Strong Q1 primary surplus and rising vehicle import duties drive continued overperformance
• Revenue collection agencies already exceeding targets, signaling robust economic momentum

Sri Lanka is expected to outperform its fiscal target for the third consecutive year in 2025, as more vehicle import duties enter the coffers, the Economic Intelligence Unit (EIU) said.

The London-based think tank said that after Sri Lanka reached its primary surplus well ahead of target in 2024, and the latest fiscal data for 2025 show that overperformance is continuing into its third consecutive year.

“The government has generated a primary surplus in the first quarter equivalent to almost half its absolute rupee target for the year,” EIU said.

It added that the revenues (typically strong in H2) should increase over the rest of 2025 as more vehicle import duties enter the coffers, as Central Bank data on letters of credit issued for vehicle imports are a positive forward indicator.

“Finally, strong revenue growth absent any major changes in tax structure alludes to underlying economic momentum as the main driver,” It said.

Speaking to TVDerana last week, Economic Development Deputy Minister Prof. Anil Jayantha Fernando said that the three main tax collection agencies in Sri Lanka have managed to over achieve their tax targets by the end of May, collecting a total tax of Rs. 1,789 billion.

He said the Inland Revenue Department (IRD) has collected Rs. 907 billion by the end of May, when the target was Rs. 900 billion, Customs has collected Rs. 780 billion from the Rs. 730 billion target, and the Excise Department has collected Rs. 102 billion from the Rs. 98 billion target.

Moreover, he said that the dollar outflows for vehicle imports have reached $ 400 million by the end of May and that the government is confident that it will reach the $ 1-1.2 billion foreign exchange target or even surpass that by year-end.