Sri Lanka has unveiled a national budget for 2027 that aims for sustained economic growth of 7 per cent, with new spending on energy, infrastructure and trade, while the accompanying Appropriation Act leaves tax policy changes to separate legislation.
Sri Lanka’s President Anura Kumara Dissanayake presented the 2027 national budget in parliament on Thursday, 12 November 2026, setting total government expenditure at LKR 9.92 trillion (USD 31.8 billion). About LKR 2 trillion of this is earmarked for capital investment, according to local outlet Newswire.
The spending plan prioritises infrastructure development, energy security, public enterprise restructuring and debt servicing, while allocating funding to key tax and revenue authorities.
Parliament begins debating the budget today, 13 November 2026, and the final vote is scheduled for 14 December 2026.
Tax and fiscal provisions in the appropriation Act
The Appropriation Act for Financial Year 2027 is chiefly an expenditure authority law. It contains no specific changes to income tax rates, VAT, corporate tax incentives or statutory tax reform. Such amendments are enacted through separate legislation or announced in the Budget Speech.
Under Section 8, if tax receipts or other state revenue fall short of the levels anticipated to fund authorised expenditure, the Minister of Finance, with Cabinet approval, may withdraw or limit funds previously released from the Consolidated Fund. Any such reductions must be included in the Final Budget Position Report submitted to Parliament under Section 51 of the Public Financial Management Act, No. 44 of 2024.
The First Schedule allocates funds to the main revenue and fiscal bodies:
- Department of Inland Revenue (Head 246): LKR 21.5 billion (LKR 7.5 billion recurrent; LKR 14 billion capital)
- Sri Lanka Customs (Head 247): LKR 10.15 billion (LKR 6.227 billion recurrent; LKR 3.923 billion capital), plus a Seized and Forfeited Goods Advance Account with a maximum expenditure limit of LKR 10 million
- Department of Excise (Head 248): LKR 3.75 billion (LKR 3.25 billion recurrent; LKR 0.5 billion capital)
- Department of Fiscal Policy (Head 238): LKR 172 million
- Department of Public Finance (Head 245): LKR 650.5 million
Corporate oversight and public enterprises
The Department of Public Enterprises (Head 241) receives LKR 80.52 billion, of which LKR 74.547 billion is capital, to manage and restructure State-Owned Enterprises. Other allocations include:
- Ministry of Industry and Entrepreneurship Development (Head 149): LKR 15.1 billion
- Department of Trade and Investment Policies (Head 244): LKR 2.145 billion
- Department of Commerce (Head 295): LKR 383 million
- Department of Import and Export Control (Head 296): LKR 210 million
- Department of the Registrar of Companies (Head 297): LKR 127 million
- National Intellectual Property Office (Head 299): LKR 84 million
Energy and infrastructure
The government plans a 500-megawatt floating solar programme and a 30-megawatt battery storage system, along with LKR 26.5 billion to strengthen the national electricity grid.
Households that install eligible rooftop solar battery systems will receive a subsidy of LKR 25,000 per kilowatt, capped at LKR 250,000.
Trade and technology
Dissanayake said the government will explore a free trade agreement with China and widen the existing agreement with India. An artificial intelligence centre of excellence will also be established.
Debt servicing
Under the Second Schedule, LKR 4.845 trillion is allocated to the Department of Treasury Operations (Head 249) to service public debt. This is in line with the Public Debt Management Act (No. 33 of 2024), the Local Treasury Bills Ordinance and the Active Liability Management Act (No. 8 of 2018).
Economic backdrop
Sri Lanka fell into its worst economic crisis in decades in 2022, defaulting on foreign debt amid shortages of fuel, food and medicine. Mass protests followed and forced then former president Gotabaya Rajapaksa to flee the country. Colombo secured a USD 3 billion International Monetary Fund bailout in 2023, and it is now seeking a further USD 345 million under the programme, subject to approval.
Inflation reached 8.3% in October, underlining the continued pressure on household finances as lawmakers prepare to debate the spending plan.
