When President Anura Kumara Dissanayake presents Budget 2027 in Parliament today, he will be doing so for the last time with the International Monetary Fund looking over his shoulder. Sri Lanka's four-year Extended Fund Facility is due to end in March, and the Fund has made its next tranche of about $ 345 million conditional on a Budget presented in line with programme parameters. After that, the discipline that has steadied the economy since 2023 will no longer be imposed from Washington. It will have to be chosen in Colombo.
That is the real significance of today’s speech. For three years, every Government decision on revenue and spending has been tested against an external benchmark. Consequently, it has been easy for Ministers to blame the IMF for unpopular choices and to claim credit for the results. Once the programme ends, there will be no one to blame and no one to hide behind. The judges will instead be the bond markets the country hopes to return to, having last issued international bonds in 2019, the rating agencies, and, eventually, the voters.
The numbers give the Government room to manoeuvre, which is precisely why caution is needed. According to official figures, Sri Lanka recorded a primary surplus of 5.4% of GDP in 2025, more than double the 2.6% the Government is now targeting for 2027. To a politician facing rising prices, that gap looks like money waiting to be spent. Yet it is also the cushion that persuaded Fitch to upgrade Sri Lanka to B-minus in September, while warning that debt and debt-service burdens remain high. Moreover, the economist and former Deputy Governor of the Central Bank W A Wijewardena has warned that new borrowing could cost the country 11% to 12%, a rate he says it cannot afford. A Budget that spends the cushion today could raise the price of every rupee borrowed tomorrow.
Fairness is the second test, and here the Government has a problem of its own making. The President has promised tax cuts. However, a recent IMF technical assistance report found that tax arrears recorded by the Inland Revenue Department had reached nearly Rs 2.1 trillion by the end of 2025, up from about Rs 1.1 trillion a year earlier. Of that, nearly Rs 1.6 trillion is tied up in appeals and other disputes. In other words, while salaried employees have their taxes deducted before they see their pay, a large and growing sum is stuck in a queue of objections and litigation. Before it offers relief to anyone, the Government should explain how it intends to clear that backlog, which disputes it will settle, which it will fight and which it will write off. Relief for the compliant is welcome; tolerance for the defaulter is not.
The third test is accountability. A Budget speech is, in the end, a list of promises, and promises are only as good as the record of keeping them. In June, officials at the Presidential Secretariat met to review delays in implementing last year's Budget proposals. Meanwhile, Manthri.lk's tracker of the President's key election pledges found that, by November 2025, ten of thirty had been met, ten were in progress and nine had seen no progress. These are not damning figures for a Government little more than a year old at the time, but they are a reminder that announcing is easy and delivering is hard.
The Government took a sensible step last year by publishing a Citizens' Budget alongside the speech. It should go further today and table a plain report on what happened to each proposal in Budget 2026: what was done, what was delayed and why. Such a report would cost very little, and it would give Parliament something more useful to debate over the coming weeks than slogans from either side of the House.
Finally, there is the question of who the Budget is for. According to the World Bank, poverty stood at an estimated 16.9% in 2025, still above pre-crisis levels, and the Bank describes the recovery as incomplete and uneven. Relief, therefore, should be measured not by how many groups it reaches but by whether it reaches those who were left behind. Broad concessions that please the vocal are expensive; targeted support for the poor is both cheaper and kinder.
Following rules set by a lender is one thing; setting and keeping rules of one's own is quite another. Today, the Government will show which kind of discipline it has learnt.