Sri Lanka’s Appropriation Bill/Budget for next year (2026), slated to be tabled in the Parliament today (7), comes at a time when the country is in the midst of a series of crucial economic undertakings. They range from anti-corruption efforts to restructuring State-owned enterprises (SOEs), improving exports and tax revenues, and cutting down on public expenditure, and the Budget will therefore not just be a financial document but also a test of how well Sri Lanka can balance its obligations and needs.

There is no question that economic reforms are necessary. The country cannot afford to continue its previous unsustainable practices. However, reforms must be handled with great care and foresight, and the Government should realise that the proper execution of certain funded projects also depends on decisions not related to funding.

We should remember, the Government is operating under the close watch of the International Monetary Fund (IMF), whose programme has set out a series of conditions that the country must meet in order to access much-needed financial support, restore credibility, and improve its international credit rating. These commitments make the Government’s task difficult. It must demonstrate fiscal responsibility and policy consistency to the IMF and global lenders, while also ensuring that the people are not further burdened. These are qualities that the Government can showcase through the Budget.

The ongoing anti-corruption drive is a welcome move. However, the Budget paying attention to strengthening these efforts through allocating adequate funding to institutions such as the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), the Auditor General’s Department and other key agencies is crucial. At the same time, the judicial system requires significant funding to strengthen its capacity and deliver swifter justice, and that would be welcomed by scores of people waiting for justice for years, if not decades. However, delivering on good governance and anti-corruption alone will not solve Sri Lanka’s problems. More needs to be done. 

Public transport deserves special attention. Improving public transport is no longer optional as vehicle imports, which have surpassed $ 1 billion in the first nine months of this year (January-September), continue to grow. However, this improvement should not be limited to purchasing new buses or trains. The focus should also be on quality, i.e. better maintenance, safer operations, punctuality and integration across different transport systems, and this requires funding.

Taxation is another critical area. Economists have emphasised the need to expand the tax net to include more direct taxpayers and improve income tax collection. However, this requires more than budgetary allocations. It requires structural reforms, the simplification of tax procedures, and public trust. People must be encouraged to pay their taxes voluntarily through transparency and accountability in how the tax money is used. At the same time, the Government must avoid overreliance on taxes as its primary source of income. Excessive taxation, especially on imports and local goods, has affected industries and discouraged growth. Sustainable revenue generation should come from genuine economic activities such as investments, production, and exports.

Speaking of investments, Sri Lanka is yet to make the process truly investor-friendly, and the much-discussed single window for investments is yet to be implemented. This reform deserves both priority and funding, as investments, especially by foreign parties, can support the economy in a number of ways without the Government having to risk public funds. Further, policy consistency is key to secure investments, and different messaging from Government MPs will not help. 

We cannot ignore the fact the Government must also prepare for the resumption of debt repayments in 2028. This will be a massive challenge, and the planning must start now and through things like budgets. There is a need to align national priorities and debt obligations in order to ensure that one does not undermine the other. SOE reforms too must be completed without delay, as inefficient enterprises drain public funds. Balancing defence expenditure reduction and keeping national security robust will be a challenge for the Government. 

There is an urgent need to direct more funds towards critical sectors such as education and health, which continue to struggle even to provide basic services. These sectors are underfunded, overstretched, and lack essential resources. The agriculture sector is also in need of assistance, as farmers are affected by low income and high production costs leading to many leaving the sector.

The 2026 Budget presents an opportunity to make reductions to the cost of living at a scale that the public can genuinely feel.

While continuing the existing social welfare programmes, at least until inflation shows a considerable decline, the country should also focus on allocating funds for initiatives that address the root causes of poverty and provide more sustainable, self-earning income sources for those in need. This should include not only expanding existing employment opportunities but also creating avenues for people to engage in non-traditional vocations.

Another concern that deserves attention in the context of the Budget is the Government’s tendency to reverse major decisions. Over the course of this year, several policy reversals have taken place, a troubling situation that shows inadequate consultation with the relevant stakeholders. Except in cases where a decision is clearly flawed or harmful, frequent reversals indicate weak planning and the wastage of public resources. The 2026 Budget must therefore include policies and projects that are based on stakeholder dialogue and consensus, which will ensure continuity and avoid wasteful mid-course corrections.

In addition to all these priorities, the Government should focus on national policies. Many of Sri Lanka’s problems stem from ineffective or outdated policies. Areas such as land use, transport, investments, social welfare, and labour rights require updated and well-coordinated national frameworks, and fund allocations are unlikely to result in positive outcomes unless the relevant policies are updated and adhered to.

As Sri Lanka steps into another financial year, the 2026 Budget must go beyond numbers. It should be a roadmap of discipline, transparency, and responsibility.