Sri Lanka recorded a budget surplus of Rs. 9.5 billion in the first half of 2026, according to the Finance Ministry’s Fiscal Review Report — a turnaround from the Rs. 405.6 billion deficit registered in the same period of 2025.
Total revenue and grants rose 27.1% year-on-year to Rs. 2.95 trillion between January and June, reaching 55.8% of the Rs. 5.3 trillion annual estimate.
Tax revenue expanded 25.9% to Rs. 2.71 trillion, or 55.2% of the full-year target of Rs. 4.9 trillion. Non-tax earnings rose more sharply, up 43.6% to Rs. 243.6 billion, already fulfilling 67.7% of the projected Rs. 360 billion for the year.
Grants moved in the opposite direction, falling 46.4% to Rs. 1.8 billion — just 6% of the Rs. 30 billion budgeted.
Total government expenditure grew 7.9% to Rs. 2.94 trillion, representing 39.0% of the Rs. 7.5 trillion annual projection. Recurrent spending rose 6.5% to Rs. 2.66 trillion, while capital expenditure and net lending increased 23.6% to Rs. 276.6 billion — though that figure represents only 16.1% of the Rs. 1.7 trillion capital estimate, pointing to slow execution of the investment programme.
The primary balance, the indicator tracked most closely under Sri Lanka’s IMF-supported reform programme, registered a surplus of Rs. 1.24 trillion, up from Rs. 859 billion in the corresponding period of 2025.
Sri Lanka Customs led revenue collection with Rs. 1.29 trillion, meeting 58.5% of its Rs. 2.2 trillion annual estimate. The Inland Revenue Department collected Rs. 1.24 trillion, or 52.0% of its Rs. 2.4 trillion goal, and the Excise Department gathered Rs. 138 billion, reaching 56.5% of its Rs. 245 billion projection. Other revenue streams brought in Rs. 35.0 billion.
The half-year figure is considerably narrower than the Rs. 197.3 billion surplus reported through the first five months of the year, which was based on Central Bank data. The two sets of figures come from different reporting agencies, but read together they indicate that expenditure outpaced revenue during June, all but erasing the surplus accumulated earlier in the year.
Update, September 9: Prime Minister presents the same figures to Parliament
Prime Minister Dr. Harini Amarasuriya set out the first-half revenue performance in Parliament on 9 September, NewsFirst reported. The figures she gave match this dataset rather than updating it: tax revenue up 25.9% to Rs. 2,710.6 billion from Rs. 2,152.1 billion, and non-tax revenue up 43.6% to Rs. 243.6 billion from Rs. 169.6 billion.
She put total tax and non-tax revenue at Rs. 2,954.2 billion, against Rs. 2,321.7 billion a year earlier — growth of 27.2%.
That 27.2% is not a revision of the 27.1% above. The two measure different bases: 27.1% covers total revenue and grants, while 27.2% covers tax and non-tax revenue with grants excluded. Because grants fell 46.4% to Rs. 1.8 billion, including them drags the combined growth rate marginally below the revenue-only rate. Both figures describe the same six months.
Two facts the Fiscal Review Report account did not carry
The Prime Minister’s statement adds detail absent from the July reporting:
- The Inland Revenue Department’s growth rate. IRD collection rose 20.2%, from Rs. 1,037.9 billion in the first half of 2025 to Rs. 1,247.6 billion. The original account gave the IRD’s absolute collection and its share of target, but not the year-on-year change — which is the slowest of the three main collecting agencies.
- What drove non-tax revenue. A transfer of Rs. 42 billion in dividends from the Central Bank of Sri Lanka made a significant contribution to state income during the period. This is the substantive addition: the 43.6% jump in non-tax revenue was the strongest growth figure in the half-year, and roughly 57% of the Rs. 74 billion increase is accounted for by a one-off dividend transfer from the Central Bank rather than by recurring non-tax income.
Amarasuriya attributed the overall rise primarily to increased collection by the Inland Revenue Department, Sri Lanka Customs and the Excise Department.
The Prime Minister did not address the expenditure side, the Rs. 9.5 billion surplus, or the June deterioration noted above.
