Politics · Sri Lanka Bureau
Sri Lanka unveils ambitious economic transformation plan in 2027 budget
President outlines roadmap to move Sri Lanka beyond debt stabilisation, with public debt projected to decline to 87% by 2032. Budget includes salary increases for public sector workers and tax relief measures ahead of the post-IMF programme period.
LSN Sri Lanka ·
Sri Lanka's government has unveiled an economic transformation agenda centring on reducing the country's debt burden and positioning the economy for sustainable growth beyond its International Monetary Fund programme. The 2027 budget projects public debt will fall to 87% of GDP by 2032, marking a significant decline from current levels as the country continues its fiscal consolidation efforts.
The budget framework targets a primary surplus of 2.3% and an overall budget deficit of 5%, reflecting the administration's commitment to fiscal discipline. Foreign debt servicing is expected to ease to US$2.99 billion next year, providing some relief to government finances amid the ongoing stabilisation process.
To support purchasing power, the government has increased the personal income tax-free threshold to Rs. 162,500, while announcing salary and allowance increments across the public sector. These measures reflect efforts to balance fiscal consolidation with support for workers and households.
The budget also signals preparations for the period following the conclusion of the IMF programme, with policymakers laying groundwork for a transition to conventional financing arrangements. The roadmap suggests the government intends to move beyond crisis-management priorities toward longer-term economic development objectives.