Sri Lanka’s fiscal position strengthened sharply in the first two months of 2026, with the Government recording a primary surplus of Rs. 545.42 billion, up 66.1% from Rs. 328.45 billion in January-February 2025, according to data released by the Finance Ministry.
The overall budget balance also turned to a surplus of Rs. 169.71 billion, compared to a deficit of Rs. 86.62 billion in the same period of 2025 — a turnaround of nearly 296% year-on-year.
Total revenue and grants rose 35.5% to Rs. 1.03 trillion, supported by strong growth in tax collections. Tax revenue increased 35.8% to Rs. 959.9 billion, while non-tax revenue grew 32.8% to Rs. 71.26 billion. Total expenditure and lending minus repayments rose just 1.6% to Rs. 861.45 billion, with recurrent spending up 1.5% and capital expenditure up 4.2%.
The Treasury said the outturn reflected the continuation of fiscal consolidation supported by robust revenue mobilisation and restrained expenditure growth, despite post-Cyclone Ditwah reconstruction pressures and global energy-related cost increases.
The stronger numbers come as Sri Lanka moves closer to its next tranche of International Monetary Fund (IMF) financing following the staff-level agreement on the combined Fifth and Sixth Reviews under the Extended Fund Facility.
External pressures remain elevated. Higher global energy prices and reconstruction-related spending are expected to weigh on public finances in 2026, while the IMF and rating agencies have stressed the need to sustain revenue performance and adhere to programme targets. The numbers also align with the CBSL’s flagged scenario in its Annual Economic Review of moderating credit growth but stronger fiscal buffers.
