Sri Lanka's 2027 Budget widens deficit to 4.5% of GDP

<p><em>Special Reporting from LSN News, adapted from today's LSN Special Report episode. <a href="https://youtu.be/XCd4730Wh5Q" target="_blank" rel="noopener">Watch the video on YouTube.</a></em></p>

<p>On Thursday, 12 November, in Colombo, President Anura Kumara Dissanayake, speaking as Finance Minister, presented Sri Lanka's 2027 Budget — the government's third. It widens the deficit after years of tight post-default budgets, as the International Monetary Fund programme that helped steer the recovery nears its end.</p>

<h2>The fiscal totals</h2>

<p>According to the official Budget estimates, the government intends to spend 7.9 trillion rupees, against revenue and grants of 6.2 trillion. Including a 260 billion-rupee estimate to rebuild after Cyclone Ditwah, the deficit widens to 1.75 trillion rupees, or 4.5 percent of GDP, from 3.7 percent this year. The primary surplus — the balance before interest — slips to 2.3 percent of GDP. Revenue is projected at 15.8 percent of GDP, below the government's own 16 percent medium-term floor.</p>

<h2>Public investment</h2>

<p>Public investment is the centrepiece: two trillion rupees, just over five percent of GDP. The President said the aim is to move "from economic stability towards transformation."</p>

<h2>Tax, welfare and public-sector pay</h2>

<p>From April 2027, the income-tax-free threshold rises to 162,500 rupees a month, which the government says will cut monthly tax bills by up to 15,750 rupees. Two hundred and thirty billion rupees is set aside for social protection, including Aswesuma, and allowances for kidney patients and persons with disabilities rise to 12,500 rupees a month. A further 110 billion rupees funds the final phase of a public-sector salary revision.</p>

<h2>Debt and the IMF programme</h2>

<p>According to the Budget speech, central government debt has fallen from 114 percent of GDP in 2022 to 95 percent by the end of 2025 — the level the IMF programme had targeted by 2032. The Fund facility is due to end in March 2027, and a cabinet committee will report on whether Colombo should enter another programme.</p>

<h2>Opposition and the votes ahead</h2>

<p>Opposition Leader Sajith Premadasa said the Budget offers no meaningful relief on the cost of living, poverty or unemployment, and accused the government of concealing accurate economic data. The proposals are not yet law. Parliament is due to vote on 20 November and 14 December.</p>

<h2>Sources</h2>

<ul>

<li><a href="https://www.parliament.lk/en/home/parliament-news/view/5541" target="_blank" rel="noopener">Parliament of Sri Lanka news, 12 Nov 2026</a></li>

<li><a href="https://www.treasury.gov.lk/api/file/ea495202-fcb1-4c78-b34e-58389cb20738" target="_blank" rel="noopener">Ministry of Finance Budget Speech 2027</a></li>

<li><a href="https://www.themorning.lk/articles/HiKLojI97SsGiywnTl50" target="_blank" rel="noopener">The Morning, 13 Nov 2026 (themorning.lk)</a></li>

<li><a href="https://www.newswire.lk/2026/11/12/sajith-calls-budget-2027-a-parrot-like-speech-without-solutions/" target="_blank" rel="noopener">Newswire, 12 Nov 2026</a></li>

<li><a href="https://www.themorning.lk/articles/Cd64wzt6yDaiHTp1cAiu" target="_blank" rel="noopener">The Morning, 13 Nov 2026 (themorning.lk)</a></li>

</ul>