Update, 12 November, 2.00 p.m. Colombo — the speech is under way. President Dissanayake began delivering the Budget speech at about 1.52 p.m. The opening aims, the first substantive remarks and the confirmed debate timetable are at the foot of this article. The figures in the body above remain the Appropriation Bill’s.
President Anura Kumara Dissanayake is due to present an investment-oriented 2027 Budget in Parliament on Thursday afternoon, carrying Rs. 2 trillion in capital allocations and a further upward adjustment to the Pay As You Earn threshold, the Daily FT reported.
It is the government’s third budget, and the first framed around expansion rather than stabilisation.
The headline numbers
The Appropriation Bill, gazetted on 18 September, sets service expenditure for ministries and departments at Rs. 4.99 trillion and statutory expenditure charged to the Consolidated Fund at Rs. 4.92 trillion — total expenditure of about Rs. 9.92 trillion. Net outstanding government borrowings are capped at no more than Rs. 3.8 trillion for the year.
The Rs. 2 trillion capital allocation prioritises roads, railways, rural connectivity, logistics and some social spending.
Recurrent commitments dominate the rest. The Department of Pensions alone accounts for Rs. 550.35 billion of the Public Administration Ministry’s Rs. 651 billion. Provincial Councils are budgeted separately at Rs. 574.95 billion recurrent and Rs. 85 billion capital — a combined Rs. 659.95 billion that takes the ministry’s effective allocation to roughly Rs. 1.31 trillion, ahead of Finance.
Relief, staged
The PAYE threshold, already raised from Rs. 100,000 to Rs. 150,000, is set to rise again. The President has also set out a two-to-three-year VAT reduction and a one-year deferral of the IMF-backed property tax. No new taxes or rate increases are expected, with the revenue strategy resting on compliance rather than rate changes.
Revenue mobilisation is running ahead of target: the original goal was 15.4% of GDP by 2030, but the country passed 16% by end-2025. The President reviewed the final document at the Presidential Secretariat on 11 November with Treasury Secretary Dr. Harshana Suriyapperuma.
The IMF condition
The IMF reached staff-level agreement on the Seventh Review of its $3 billion Extended Fund Facility on 8 November, making Executive Board approval — and a $345 million tranche — contingent on this budget being presented in line with programme parameters and on adequate progress with debt restructuring. Revenue must stay above 15.3% and 15.4% of GDP in 2026 and 2027, with primary expenditure capped at 12.9%.
The backdrop has worsened. Inflation rose to 8.3% year-on-year in October from 8% in September, a three-year high. The current account swung to a $128 million deficit in September, taking the nine-month shortfall to $420 million against a $1.9 billion surplus a year earlier. The Fund recorded 4.2% growth in the second quarter — an eleventh consecutive quarter of expansion — and reserves of $6.9 billion at end-August, while flagging risks from the Middle East war, global trade policy and El Niño.
“Safeguarding macroeconomic stability in a shock-prone environment requires continuing with prudent policies and bold reforms to protect the hard-won gains of the program,” the IMF said.
Parliament meets at 1.30 p.m. The second reading vote follows at 6 p.m. on 20 November, with the third reading on 14 December.
Update: Hiru News files
Hiru News filed its own account on Thursday morning, confirming that the President presents the budget in his capacity as Finance Minister on Thursday afternoon and that the debate runs 26 days to 14 December.
Hiru puts estimated government expenditure at more than Rs. 4,982 billion, an increase of Rs. 558 billion on the 2026 estimate, and notes the 2027 Appropriation Bill had its first reading on 7 October. Deputy Minister of Finance and Planning Anil Jayantha said the public could expect appropriate relief for the groups that need it.
Not reported
The filing does not give a deficit target, a growth projection for 2027, or the size of the PAYE threshold increase. It does not say which ministries absorb the Rs. 2 trillion capital allocation, nor what the deferred property tax costs in forgone revenue. Nothing addresses how the government reconciles a VAT reduction with the IMF revenue floors it must hold through 2027.
On sourcing: this report was first published from a single verified source, Daily FT, filed at 4.45 a.m. Colombo time on Thursday, when the Daily Mirror rails, Hiru News and EconomyNext had not yet filed their Thursday editions. Hiru News filed at 6.28 a.m. and has since been added as a second source; the update section above records what it adds. This desk’s earlier reporting on the budget timetable and the President’s final review covers the preceding days. The figures above are the Appropriation Bill’s, not the speech’s — the speech had not been delivered when this was published.
Update — EconomyNext on what the money cannot buy
EconomyNext filed a preview at 8.46 a.m. on Thursday under Shihar Aneez, and it is the first account to set the Rs. 2 trillion capital allocation against the state’s record of actually spending it.
The execution problem
President Dissanayake has himself acknowledged, in recent dialogues with business leaders, that Sri Lanka used only 64% of its capital budget in 2023, 54% in 2024 and 76% in 2025, EconomyNext reports.
The causes it identifies are procedural rather than financial: multi-agency approval gridlocks in which a project can need sign-offs from up to 30 separate bodies, and procurement rules written strictly enough to prevent corruption that they have, in its assessment, paralysed rollouts.
On a record allocation, a 54%-to-76% utilisation band is the difference between Rs. 1.08 trillion and Rs. 1.52 trillion actually reaching the economy.
No mega-projects to absorb it
The central contradiction EconomyNext identifies is the absence of large-scale projects ready to begin. Major infrastructure remains in preparatory or tendering phases:
- The East Container Terminal at the Port of Colombo is running at 0.5 million TEUs against a 3.2 million TEU capacity, with the state still seeking private operating partners.
- The $1.4 billion breakwater required for West Container Terminal Phase 2 gets only preparatory studies funded in 2027, with final ADB feasibility reports not due until April 2027.
- Plans to open four high-tension transmission lines to private investment and to tender 250 MW of battery energy storage are at a similar stage.
The oil shock
By August 2026 the fuel import bill had reached $4.082 billion, already exceeding the $4.042 billion spent in the whole of 2025.
The Treasury has spent Rs. 57 billion on fuel subsidies over five months and committed a further Rs. 41 billion to a Rs. 70-per-litre diesel relief subsidy running through December.
The fiscal space
Citing the Ceylon Chamber of Commerce, EconomyNext reports extreme poverty hovering near 25%, leaving roughly 5 million people dependent on Aswesuma — which it reads as leaving no room for populist stimulus. What the government has instead is incremental: about Rs. 100 billion into rural infrastructure, minor irrigation tanks and collateral-free loans, performance-based dollar payouts for tourism operators, and a review of the 2.5% maritime bunkering tax.
An 18th IMF programme
With the current four-year Extended Fund Facility approaching its March 2027 expiry, EconomyNext reports that President Dissanayake has confirmed active evaluation of modalities for a successor programme — an unprecedented 18th arrangement — described as safeguarding stability while driving growth.
That is the single most consequential item in the preview, and it recasts the budget: not a transition out of IMF oversight but the fiscal anchor for a further round of it. It is also the claim the Opposition Leader attacked from the other side the same morning, accusing the government of abandoning a mandate to renegotiate.
Deputy Finance Minister Anil Jayantha Fernando and Deputy Economic Development Minister Nishantha Jayaweera both spoke ahead of the presentation, Fernando in a recorded video circulated by the Finance Ministry: “Our next step forward is realizing true economic transformation. Within that transformation, we specifically require investments; within that transformation, we need to introduce dedicated economic activities.”
Update: Cabinet clears the budget
The Cabinet approved the 2027 Budget at a meeting at the Presidential Secretariat on Thursday morning, hours before the speech. The Daily Mirror describes the approval as “a routine procedural formality ahead of the presentation of the Budget,” and both outlets treat it as a step completed rather than a contested decision.
Hiru News adds a figure not in the earlier filings: estimated government expenditure for 2027 exceeds Rs. 4,982 billion, an increase of Rs. 558 billion on the 2026 estimate. That is consistent with the Rs. 4.99 trillion service expenditure set out in the Appropriation Bill above — Rs. 4,982 billion is the same number stated in billions — and the Rs. 558 billion year-on-year increase is new to this report.
Hiru also confirms the debate timetable this desk reported on Wednesday: 26 days running to 14 December, a seven-day second reading debate with the vote on the afternoon of 20 November, and a 19-day committee stage from 21 November to 14 December including four Saturdays, closing with the third reading vote on 14 December. It counts the 26 days from Thursday, where Wednesday’s filing counted the debate proper from 13 November; the end date and the stage lengths are identical.
Deputy Minister of Finance and Planning Anil Jayantha said ahead of the presentation that the public could hold on to the expectation that appropriate relief would reach the segments that should receive it. He named no measure.
Update — the speech begins
President Anura Kumara Dissanayake began delivering the 2027 Budget speech in Parliament at about 1.52 p.m. Colombo time on Thursday, in his capacity as Minister of Finance, Planning and Economic Development, Hiru News reported.
Members from both the government and opposition benches had been arriving at the parliamentary complex through the early afternoon, Hiru reported earlier.
The stated aims
The Daily Mirror’s live blog records the President opening with five objectives: to eradicate poverty, build a just society, eliminate fraud and corruption, accelerate economic development and restore public trust. The President arrived in the chamber at 1.41 p.m. and began shortly after.
The first substantive remark
The earliest reported content of the speech concerns an external shock rather than a domestic measure. The hike in fuel prices and rising premiums triggered by the Middle East crisis have put pressure on Sri Lanka’s economy, the President told Parliament, the Daily Mirror reported.
That is the same risk the IMF flagged in its Seventh Review statement on 8 November, set out in the body of this article — and the President is now naming it from the despatch box as a live constraint rather than a projected one. The “rising premiums” reference is to insurance costs, which move with shipping and freight risk in the Gulf.
Timetable confirmed
Hiru confirms the debate structure once more: 26 days to 14 December, with the second reading debate running seven days and the second reading vote on the afternoon of 20 November.
What is still not known
No specific proposal, allocation, tax change, salary increase or subsidy had been reported at the time of this update. The speech was still being delivered. The PAYE threshold increase, the VAT reduction, the property tax deferral and the composition of the Rs. 2 trillion capital allocation — the four measures trailed in the previews above — remain unquantified. This desk will carry the proposals in a separate report once the speech concludes and newsrooms file its contents.
Note on Hiru’s slug: the URL for its speech filing renders the President’s name as “anuradha”. Hiru’s own Sinhala text gives it correctly as ජනාධිපති අනුර කුමාර දිසානායක — President Anura Kumara Dissanayake.
Update, 6.30 p.m. Colombo — the proposals, measure by measure
The speech has been delivered and newsrooms have filed its contents. Of the four measures listed as unquantified above, the PAYE threshold increase is now known; the VAT reduction, the property tax deferral and the full composition of the Rs 2 trillion capital allocation are still not separately itemised in the reporting.
This desk is carrying the proposals as separate reports:
Tax and relief
- The tax-free threshold rises to Rs 1.95 million and a new 12% band is inserted — the monthly PAYE threshold goes from Rs 150,000 to Rs 162,500 from 1 April 2027. The wider tax package costs the Treasury a net Rs 28.4 billion next year.
- Sprats and Maldive fish levies cut to Rs 10 a kilo from Friday, sugar levy up Rs 10 — the only revenue-positive line in the tax package, and the only measure taking effect this week.
Pay and public service
- Rs 110 billion for the final phase of public sector pay, with allowance rises across eight services — including Rs 2,500 a month for pensioners who retired between 2020 and 2024, and provision to recruit a further 110,000 into the public service.
Capital spending
- Rs 487 billion for roads
- Rs 10.9 billion for urban flood control, Rs 3.2 billion of it on Colombo’s canals
- Rs 77 billion for drinking water and sanitation
- Rs 26.8 billion for urban low-income housing
- Metro buses to Kandy, Galle and Jaffna, with 100 electric buses donated by China
- Rs 4 billion for industrial estates, and a push to commercialise graphite, quartz and mineral sands
- A major overhaul of the international airports, bunkering capacity at three ports, four Mannar basin oil exploration contracts, solar and battery subsidies and tax breaks for rural telecom towers
Policy and external
- A committee to examine whether another IMF programme is needed after the current EFF
- An expanded economic partnership with the UAE and Oman
Still not itemised
The VAT reduction and the property tax deferral trailed in the previews have not been separately quantified in the filings reviewed, beyond a Rs 2.98 billion revenue cost attributed to VAT revisions in the budget’s own impact summary. The composition of the Rs 2 trillion capital allocation remains only partially visible: the capital lines reported above account for well under half of it.
