President Anura Kumara Dissanayake, in his capacity as the Finance Minister, made the 81st Budget speech yesterday (12) in Parliament on the Appropriation Bill for next year (2027).
Following are excerpts from the speech:
Every Budget we’ve presented has established a firm conviction that, as a nation, we’re emerging from the deepest crisis and are on a correct and well-planned trajectory.
Eradicating poverty, building a just society, uprooting bribery and corruption, accelerating economic development, restoring the trust of the people and providing every citizen with the opportunity to build a decent life are among our key objectives.
Creating a true renaissance through all of these is the core objective of our Budget.
Today, we have the confidence, experience, economic foundation and stability required to take our country's economy into a transformative era. The Budget for 2027 is the next step built on those foundations. Our expectation is to make it a Budget that strengthens the production economy, protects small and medium scale industrialists, makes room for investment, connects knowledge and technology to the economy through digital economic activities, protects the environment and ensures social justice.
This Budget has been prepared based on our policy priorities, available resources, fiscal space and implementation capacity.
The increase in fuel prices, premiums and shipping and insurance charges had a very adverse impact on our energy market. We have still not been able to free ourselves from the pressure this created on our economy and people's lives. As a result, more than Rs. 147 billion was spent to minimise the impact on the people and economic stability.
Further, according to the Post-Disaster Needs Assessment report, the damage caused by Cyclone Ditwah to housing, industries, railway systems, agriculture, education and the health system has been estimated at United States Dollars ($) two billion, which, together with economic losses of $ 1.4 billion, amounts to a total of about $ 3.4 billion (Rs. 1.022 trillion).
As forecast by the World Meteorological Organisation, it has been confirmed that there’s a 100 per cent probability that the El Niño weather condition that has now developed will reach its peak in February. This El Niño weather condition poses a risk of adverse impacts on agriculture, food prices, water resources and hydropower. We consider it one of our foremost responsibilities to identify such risks that may arise both globally and domestically in advance, and to further stabilise the economy so that it is capable of facing them.
The main objective of this Budget is to move from economic stability towards transformation. It is to achieve a progressive transformation in every sphere, including investment, exports, productive employment, social welfare and sustainability.
What we propose through the 2027 Budget is to implement the reforms and proposals for a new economic transformation required, based on the economic stability that we’ve achieved so far, to increase production, to involve the people as stakeholders engaged in the economy, to ensure that the gains achieved in the economy are distributed fairly among the people, and to achieve the sovereignty of the national economy.
Economic transformation does not mean presenting yet another list of expenditures. It means that every investment made by the Government, every tax concession granted, every borrowing undertaken and every social protection programme proposed will be assessed on the basis of the economic and social benefits generated through them.
It is not our objective to make all the sacrifices that the people bore during the economic crisis, and continue to bear even at this moment, into permanent sacrifices. It is our duty to build economic stability, better jobs, fair incomes, a quality public service, a safe social environment and a sustainable future for future generations.
Seven strategic objectives of the Budget
The fundamental structural macroeconomic problem that Sri Lanka has faced for a long time has been the deficits in the Budget, the balance of payments and the current account. Although we were able to reduce the Budget deficit significantly through correct revenue and expenditure policies, the external sector has not yet been strengthened as required. The progress achieved in the fiscal sector must be made the foundation for a structural transformation that strengthens the external sector.
This need becomes even clearer when we look at the current state of the world economy.
We need a long-term plan capable of withstanding these conditions.
Safeguarding macroeconomic stability and strengthening the resilience of the economy
While safeguarding macroeconomic and fiscal stability, our main objective is to ensure debt sustainability and to prepare Sri Lanka to face future internal and external shocks. For this, sustainable Government revenue, prudent expenditure management, planned debt repayments, adequate fiscal space and strong foreign reserves are essential. It is also important to maintain adequate coordination between fiscal and monetary policies, while respecting the legal mandate of the Central Bank in maintaining price stability.
The target of the International Monetary Fund (IMF)-Extended Fund Facility (EFF) programme is to bring public debt down to a level of 95% by 2032. Based on the progress in public financial management, the IMF Sixth Review has forecast that this will decline to 87%. Annual borrowing plans and strategies are being implemented under the leadership of the Public Debt Management Office to maintain debt sustainability. Total foreign debt service amounted to $ 3,707 million last year (in 2025) and $ 3,591 million this year (in 2026). Going forward, it will be $ 2,986 million and $ 3,574 million in 2027 and 2028, respectively. We have the stability required for this debt servicing.
Accelerating economic growth driven by investment, production and exports
Our target is to accelerate the structural transformation towards a high-productivity, export-competitive production economy. Expanding domestic and foreign private investment, diversifying export products and markets, integrating with international value chains and promoting industries and services with higher value addition are the main areas of this.
We are taking steps to broaden access to finance for small and medium-scale enterprises and to establish a clear and transparent investment environment for investors.
Enhancing productivity through technology, innovation and human capital
We give priority to enhancing national productivity by strengthening education, competency development, research, innovation and digital transformation, modernising public services, expanding digital infrastructure, encouraging the use of new technologies and strengthening collaboration among educational institutions, research institutions and industries.
In particular, it is essential to equip our younger generation with the competencies required for the changing domestic and global job market, and to transform knowledge and innovation into income-generating enterprises and services.
Empowering the rural economy and ensuring inclusive growth
The agri-food sector has very high potential for export and rural income growth. Instead of excessive reliance on broad-based and untargeted subsidies that don’t contribute to raising productivity, high priority should be given to directing unproductive lands to productive cultivation, agricultural research, climate-smart technology, water management, storage and cold storage facilities, product quality certification and digital systems. It is also essential to resolve, after proper study, the existing barriers to land use, rural access to finance and connecting producers to markets.
A new economic transformation at the rural level can be brought about by encouraging small and medium-scale entrepreneurs, creating new economic opportunities for rural people, and developing the technical, vocational and linguistic skills required for the modern job market.
Stability and continuity of the energy markets
Rising international fuel prices, supply chain disruptions and climatic changes form the basis of instability in the energy sector in our country. Our objective is to change these underlying conditions that we face with regard to energy. For this, it is also necessary to expand renewable energy, and to improve electricity transmission networks, energy storage and energy efficiency. Our target is to minimise the long-term pressure on foreign exchange spent on imported fuel, while safeguarding the continuity of the essential energy supply through the use of diverse supply routes and energy sources.
Strengthening resilience to climate Disasters
It is important to follow standards capable of withstanding future disasters, early warnings and proper maintenance plans. Along with this, food supply chains, storage, public transport and the mechanisms for distributing essential goods must be strengthened. The continuity of services such as essential communication facilities and electricity must be ensured. Our objective is to significantly minimise the resulting paralysis of economic activities and the pressure on people's lives.
Modernising the Government machinery
It is essential to build an efficient Government machinery that provides a quality service to the people, facilitates investment and production activities, and is accountable to the law and transparent. Modernising public financial management, State-owned enterprise and asset management, tax administration and the procurement process are essential elements of this. Minimising corruption and unnecessary administrative delays, while strengthening the rule of law and accountability, is equally important to enhance public trust and to safeguard public resources.
Medium-term macroeconomic and fiscal path
Our medium-term economic target is to move towards a sustainable economic growth of 7% or higher. Accordingly, we expect to continue fiscal consolidation in line with the responsibility framework established by the "Medium-Term Fiscal Framework 2027–2031" and the "Public Financial Management Act". Maintaining a primary surplus of 2.3% of the gross domestic product (GDP), maintaining the Budget deficit at a level below 5%, and placing public debt on a sustainable path are our core fiscal targets.
Our objective is to maintain Government revenue at a level not less than 16% of the GDP in the medium term, and to gradually increase it to about 20% in the long term. To achieve these targets, the necessary reforms will be implemented to broaden the tax base, rationalise tax exemptions and incentives, digitalise tax administration and strengthen tax compliance.
In accordance with the said Act, we’ll take steps to maintain medium-term expenditure in line with the primary expenditure ceiling. However, due to the additional allocations required to restore the infrastructure and people's livelihood damaged by Ditwah, primary expenditure in 2027 is expected to increase temporarily to 13.6% of the GDP. While managing these special expenditure requirements within the statutory fiscal framework, we also expect to bring primary expenditure back to 13% of the GDP from 2028 onwards.
We expect to maintain public investment at a level exceeding 4% of the GDP from 2027 onwards. In 2027, capital expenditure of Rs. 2,000 billion has been allocated, amounting to a total public investment of 5.12% of the GDP, comprising 4.48% through the Budget and 0.64% through the Supplementary Estimate for Ditwah.
The EFF programme entered into with the IMF is scheduled to conclude in March. We expect to successfully complete the 17th IMF programme. While the programme to stabilise the economy domestically is proceeding successfully, it is difficult to forecast the impacts arising from global and natural disasters at a time when we are preparing for an economic transformation for growth. We believe that our reserves must be further strengthened to successfully face such situations.
Therefore, the Cabinet of Ministers has appointed a committee headed by the Deputy Finance and Planning Minister to examine and submit a report on the suitability of entering into another programme after the successful completion of the current IMF programme, and on what type of programme it should be.
For social justice and the protection of the people, targeted social protection programmes will be further strengthened to protect low-income and vulnerable households who face the highest risk in the face of economic and natural disasters.
Our people made exceptional sacrifices and endured great hardships for this economic stabilisation. Doing justice to these sacrifices means achieving a rapid turn from economic stabilisation towards transformation.
Our Budget proposals are not confined to paper alone. They are proposals that are implemented in practice on the ground. Therefore, every new proposal will have a clearly accountable institution, outcome indicators, national priorities, a cash flow plan and a transparency that can be easily observed by the public.
What we are striving to build is a country that safeguards the dignity of the citizen, ensures the safety of the child, gives due value to labour, creates opportunities for knowledge and protects natural resources for future generations.
Having overcome the challenges that prevailed and built stability in the economy, our next target is to commence a forward-looking and transformative era in 2027.
In the modern world, Governments are changed through progressive ideological revolutions, through the intelligent decisions of the people and through advanced policies and programmes suited to the future. However, our Opposition is still clinging to superstitious beliefs and has been unable to free itself from regressive thinking.
Politics must be done by going among the people on the ground, not by tying threads in cemeteries at night, nor by wasting the time of Parliament reciting curse verses.
Likewise, read the Kalama Sutta, which the Buddha preached to the Kalamas (the residents of the Town of Kesaputta), pointing out that nothing should be accepted blindly but should be examined with wisdom, and understand the revolution that the Buddha made against blind faith. Read the Aggañña Sutta, which the Buddha preached against superstition, and the Kevatta Sutta, preached against false incantations, and understand the ideological revolution brought about by the Buddha.
In the Tevijja Sutta, the Buddha asks whether, if a man standing on this bank of a river, wishing to go to the other bank, neither swims nor uses a boat but prays to the far bank, saying "Come here, far bank, come here", the far bank would come to this side.
Our hope is to make this country not merely an island, but one of the most advanced countries, not only in Asia but in the whole world, rich in knowledge, skills and modern technology.
What we need is not only to build an economically developed country, but also to build a new image of the Sri Lankan before the world. Our dream is to brand Sri Lanka in the world in such a way that a Sri Lankan is recognised as an educated, intelligent, civilised, respectable and trustworthy citizen. Our expectation is to mark before the world that, though we’re a small country, our human resources are endowed with a unique intelligence. We want to prove to the whole world that we have a generation of citizens who fulfil the responsibilities that they’ve undertaken, work with dedication, create new ideas, find solutions in the face of challenges and can move forward shoulder to shoulder with the world. What we are trying to build is not only a new economy for Sri Lanka, but also a new recognition, a new respect and a new pride for the Sri Lankan before the world.
Criticise the Government. Question our policies. Present a better alternative programme than ours. We fully accept your democratic right to do so.
But, bring alternative policies instead of curse verses, creative solutions instead of sorcery, and intelligent dialogue instead of yaga and homa rituals into the politics of this country.
When the people of our country are moving forward with technology and intelligence, should the politics of the Opposition alone turn upside down and go backwards? I would like to remind that building a political culture that befits the civilised, enlightened and proud Sri Lankan identity that we’re trying to build before the world is a fundamental responsibility entrusted not only to the Government, but also to the Opposition. The intelligent people of this country will never again set foot in that old darkness.
What we must leave behind for future generations is not our party disputes, but a prosperous and just country whose future they can take over with confidence.
Therefore, let us make the name "Sri Lankan" not merely a name that we pronounce with pride, but a proud name that the whole world accepts with respect.
Let us prove our pledge towards that, not merely in words, but through action.
Today, we extend an invitation with an open heart to all political parties in this country, to all stakeholders, and to every Sri Lankan living anywhere in the world. Come, let’s become partners in building the future of this country!. We don’t need to think along the same lines. We don’t need to hold the same opinion. But, our country is greater than our differences. The future of our children is more valuable than our individual goals. Therefore, let’s bring together our knowledge, abilities and strengths. Let’s begin from where we can agree. Let’s unite, not to get ahead of one another, but to take our motherland ahead of us all!
In the end, what we must leave behind for our children is not the story of how far above one another that we stood, but the story of how high we all, together, raised this country.
The victory of that story will not belong to one individual. It will not belong to one party. It will not belong to one generation alone.
That victory will belong to every citizen of this country.
That victory must have only one name – Sri Lanka!