Hon. Anura Kumara Dissanayake

¶ 01 Those who were born here and educated abroad had some of the best opportunities in the world. But they refused those offers and came back to serve their motherland. Yet they were not given space either to breathe freely in their birthplace or to serve it. Their fault was that they did not bow to the wrongdoing of the rulers. Likewise, they did not agree to a system that fails to give the suitable person the suitable place. Today, we invite all of them. The time when this country was a forbidden land to you is over. The old order is finished. Now there is a system where merit finds its rightful place. Come and work freely; the doors of this country are open to you.

¶ 02 “Everything to which we are entitled will come to us only if we create the capacity and opportunities to obtain it,” said Rabindranath Tagore.

¶ 03 This Budget aims to eradicate bribery and corruption at the root, to stimulate development, to restore confidence, and to create a revival by embarking on a better life.

¶ 04 We, from the Opposition, respectfully make a request: criticize us; question us; protest against us. But at the very least, when we are fighting to end drug trafficking and the underworld, and when we are working to end poverty for the sake of the future generations of this country, do not sabotage it—extend your cooperation. At the very least, in that fight, we expect the Opposition’s support.

¶ 05 Hon. Speaker, the painful events of history tell us to build this country. The deprivations, the neglect, the oppressions, the threats, the roars of uncertainty all tell us to build this country.

¶ 06 Generations of children of uncertainty could not speak with true pride of this country as their home. But we must free future generations from that lament.

¶ 07 For a more beautiful country, many sacrificed every dream of theirs; and before that beautiful land was born, every heart that died held the prayer to see the dream of making this land beautiful.

¶ 08 We have taken upon ourselves the deathbed prayers of those noble people. We will fulfill those prayers with the same resolve as a divine word.

¶ 09 We believe the sun shines beyond dark clouds, and that dark clouds will pass. We also believe that amid the darkness, bright silver linings will surely glow.

¶ 10 On this journey, we remind ourselves that the shrill cries of the enemy will not unsettle us, and we will see only the determined, hopeful eyes of our citizens.

¶ 11 We will build a nation not only economically prosperous but also morally proud, respected globally, and rich in broad human virtues.

¶ 12 On this special journey, you as citizens will play the most important roles. You are the strength and the reason behind this transformation. We extend our gratitude to the public servants, professionals, and entrepreneurs who worked honestly and with dedication without counting the cost. We invite our Sri Lankans overseas to return, invest, and join hands to rebuild our beloved motherland.

¶ 13 We will build a nation not only economically prosperous but also morally proud, respected globally, and rich in broad human virtues.

¶ 14 Finally, I express my sincere gratitude to all officials of the Ministry of Finance and to the Secretary to the Treasury, Dr. Harsha Suriyapperuma, for their unwavering dedication and tireless efforts in preparing this Budget. Their professionalism, commitment, and sense of duty have greatly assisted in crafting this broad and forward-looking Budget. As we collectively drive forward the Government’s economic reform policy framework and national development goals, we look to your continued support and dedication as officials of the Ministry of Finance to implement these proposals timely and effectively and to ensure their results.

¶ 15 Thank you very much, Hon. Speaker.

¶ 16 Question proposed.

¶ 17 Annexures tabled: - Budget Estimates Summary 2026 (Annex I)

¶ 18 Key aggregates (Rs. billion): - Total revenue and grants: 2024: 4,091; 2025: 5,100; 2026: 5,300 - Revenue: 4,031; 5,075; 5,270 - Tax revenue: 3,705; 4,725; 4,910 - Income taxes: 1,026; 1,120; 1,210 - Taxes on goods and services: 2,201; 2,953; 3,056 - Taxes on external trade: 477; 652; 644 - Non-tax revenue: 326; 350; 360 - Grants: 60; 25; 30 - Total expenditure: 6,131; 6,548; 7,057 - Recurrent: 5,340; 5,530; 5,688 - Salaries and wages: 1,066; 1,220; 1,323 - Goods and services: 351; 380; 401 - Interest: 2,690; 2,650; 2,617 - Subsidies and transfers: 1,234; 1,280; 1,347 - Public investment: 817; 1,033; 1,380 - Others: (26); (15); (11) - Revenue balance (+)/deficit (-): -1,309; -455; -418 - Primary balance (+)/(-): 650; 1,202; 860 - Overall balance (+)/(-): -2,040; -1,448; -1,757 - Gross financing need: 2,040; 1,448; 1,757 - External financing (net): 333; 200; 235 - Gross external borrowing: 3,967; 650; 700 - Amortization: -3,634; -450; -465 - Domestic financing (net): 1,707; 1,248; 1,522 - Non-bank: 2,087; 1,248; 1,522 - Bank and others: -381; -; -

¶ 19 Selected ratios (% of GDP): - Revenue and grants: 13.7; 15.9; 15.4 - Revenue: 13.5; 15.9; 15.3 - Tax revenue: 12.4; 14.8; 14.2 - Non-tax revenue: 1.1; 1.1; 1.0 - Grants: 0.2; 0.1; 0.1 - Total expenditure: 20.5; 20.5; 20.5 - Recurrent: 17.9; 17.3; 16.5 - Non-interest: 8.9; 9.0; 8.9 - Interest: 9.0; 8.3; 7.6 - Public investment: 2.7; 3.2; 4.0 - Revenue balance: -4.4; -1.4; -1.2 - Primary balance: 2.2; 3.8; 2.5 - Overall balance: -6.8; -4.5; -5.1

¶ 20 Annex II Gross Borrowing Requirement – Budget Estimates 2026 (for cash management purposes) (Rs. billion): - Total receipts excluding government borrowings: 5,355 - Total primary expenditure: 4,485 - Recurrent: 3,105 - Capital: 1,380 - Debt service payments: 4,495 - Interest: 2,617 - Amortization: 1,878 - Contingency provision: 10 - Reconciliation for book/cash value of domestic debt securities: 105 - Total gross borrowing requirement per government accounts: 3,740

¶ 21 Annex III 2026 Expenditure Proposals (Rs. million): 1. Vehicles and machinery for central and provincial/state institutions – 12,500 2. Digitization of government institutions – 1,000 3. Clear arrears of 10 SOEs within 2 years – 5,000 4. Reactivate housing loan scheme for public servants via banks – 500 5. Increase difficult-area and principals’ allowances for teachers – 1,000 6. Increase allowance for gatekeepers at unprotected railway crossings – 250 7. Develop service zones adjacent to existing investment zones – 1,000 8. Incentives to attract international data centers – 500 9. Streamline release of lands for investment – 100 10. Establish/improve industrial zones – 1,000 11. Export promotion – 500 12. Incentivize private-sector employment for persons with disabilities and youth – 500 13. Accessible public spaces and sanitation for persons with disabilities/special needs – 1,000 15. Relief for thalassemia patients – 250 16. Day-care centers for children with autism and other disabilities – 500 17. Increase total provision for community-based programs at district/divisional levels up to Rs. 25,000 million – 20,750 18. Facilities to promote a cashless economy in government institutions – 1,000 19. Increase milk production – 1,000 20. Shelters and crematoria for stray animals – 100 21. Complete Badalgama milk processing plant – 3,000 22. Improve animal breeding farms – 1,000 23. Relief for small-scale coconut growers – 2,500 24. Upgrade temperature-controlled warehouse in Dambulla – 250 25. Establish sustainable agricultural credit fund – 800 26. Facilitate mechanized paddy harvesting – 500 27. Climate-resilient irrigation to boost agriculture in Matale, Kandy and dry zones – 1,000 28. Increase Mahapola/scholarships, teacher-student, and Skills Student Diriya grants by Rs. 2,500 – 2,750 29. Allowances for low-income and disabled students in higher education – 50 30. Housing for people at high risk of landslides – 2,000 31. Supportive housing for reintegration and child care for institutionalized persons – 2,000 32. “A Place of One’s Own – A Beautiful Life” low-income housing program – 3,000 33. Housing for internally displaced persons – 1,150 34. Feasibility for flood control in Hambantota, Galle, Kalutara, Ratnapura – 500 35. Kalutara lagoon development – 100 36. Lasting solution to human-elephant conflict – 1,000 37. Ensure safety of fishermen – 100 38. Upgrade fisheries harbours – 1,000 39. National road safety program to reduce accidents – 1,000 40. Initial works for bridges at Kiran and Poondukalchenai, Batticaloa – 500 41. Build Rambukkana–Galagedara section of Central Expressway – 16,000 42. Establish health centres – 1,500 43. Relocate Deniyaya and Dambulla hospitals to suitable sites – 1,000 44. Develop sports culture – 800 45. Nationwide operation against narcotics – 1,500 46. Promote drama and performing arts – 50 47. Prisons modernization and relocation at identified sites – 2,000 48. Land acquisition for Ratnapura city development (government official housing) – 500 49. City development for Hatton and Matale – 500 50. Build town halls in Ampara and Monaragala – 200 51. Subsidize buses on non-viable rural routes for sustainable rural transport – 2,000 52. Women’s development – 200 53. Rs. 5,000 allowance for schoolchildren with disabilities from low-income families – 50 54. Complete halted construction of Nindavur Cultural Centre – 300 55. Silver Economy – investments for senior citizens – 10 56. Communicate fish catch info to fishermen using satellite technology – 100 57. Co-locate Inland Revenue Department offices under one roof – 2,000 58. Develop domestic airports – 1,000 59. Improve facilities to ensure food security – 1,000 60. Higher education and technology access for journalists (SME support) – 100 61. Flood and salinity control along Nilwala River, Matara – 1,000 62. Research-based solutions to human-elephant conflict – 10

¶ 22 Tamil Text of the Budget Speech – 2026 (English rendering)

¶ 23 Hon. Speaker, it is with great pleasure that we present our second Budget to this august House. Following the historic people’s mandate given to us, in a short span of one year we took clear decisions to meet people’s expectations and to bring a decisive change to the corrupt political culture of nepotism. We began a sustained process to modernize economic and political structures, re-establish law and order centered on people, strengthen governance, and carry the successes in the macroeconomy to people at the grassroots.

¶ 24 We assumed responsibility amidst systemic economic instability, fiscal imbalance, and administrative weaknesses that endangered the economy for decades, pushing people under severe strain and shattering expectations of those not responsible for the crisis. From the moment we received the mandate, we launched broad reforms to stabilize the macroeconomy, ensure fiscal discipline, strengthen state institutions, eradicate corruption, enhance transparency, and ensure accountability. Within just one year, these reforms enabled significant stabilization of public finances, the macroeconomy, and social resilience.

¶ 25 The economy grew by 4.8% in 1H2025. Inflation returned to a positive but low range; interest rates fell to about 8.3%, strengthening the financial sector; the exchange rate stabilized; external sector resilience improved despite global shocks; exports, tourism, and remittances increased, raising official reserves above USD 6 billion. For the first time since 2006, revenue is expected to reach about 16% of GDP this year. The primary surplus is set to reach about 2% of GDP, above the 2.3% target, strengthening investor confidence and international engagement.

¶ 26 Our fiscal strategy established disciplined, transparent, and accountable public financial management, strengthened domestic revenue, digitized revenue administration, and contained expenditure—producing a strong primary surplus. Sustained primary surpluses will reduce central government debt from 114.2% of GDP in 2022 to 96.8% by 2026, and to 87% by 2030, opening the path out of crisis.

¶ 27 The 2020–2022 crisis culminated in Sri Lanka’s declaration of default in April 2022, costing a decade of development. Contrary to earlier views that recovery to 2019 levels would take until 2029, we are confident of regaining pre-crisis levels by end-2025.

¶ 28 Debt restructuring is nearing completion. Ratings have improved (Fitch: CCC+, Moody’s: Caa1, S&P: B-/B). Under the IMF’s Extended Fund Facility and with development partners, we are meeting targets and structural benchmarks. Macro stability and fiscal/foreign reserve buffers are being rebuilt.

¶ 29 We have expanded and retargeted Aswesuma to support genuinely deserving low-income households, with 2026 revalidation; increased allowances for elders and kidney patients; enhanced Mahapola and student grants; and provided school support to children of Aswesuma families—ensuring that growth benefits the most vulnerable.

¶ 30 We are restructuring and modernizing the public service to deliver high-quality services—raising salaries in three tranches, filling essential vacancies, advancing digitization, and institutional restructuring to build an efficient and attractive public service.

¶ 31 We accelerated governance reforms and anti-corruption: new legal frameworks for PPPs, SOEs, state asset management, and procurement; strengthening IFMIS and e-procurement; treating corruption as a tax on the poor; enhancing asset and wealth disclosure (digital filings by March 2026); introducing a judicial code of conduct; removing unnecessary perks for politicians and senior officials.

¶ 32 We ensure investor protection and ease of doing business, ending arbitrary tax exemptions and favoritism. We will amend the Strategic Development Projects Act and the Port City law to make incentives rules-based and transparent; publish exemption declarations twice yearly; abolish SVAT while ensuring efficient refund mechanisms; and strengthen tax administration to a fair, progressive system.

¶ 33 A new SOE Act will clarify mandates, require audited accounts, and limit borrowing. We will strengthen state asset oversight, amend the National Audit Act to penalize negligence, appoint a special task force on state land management, and bring a State Asset Management Act in 2026. Cost-reflective energy pricing will continue with targeted support. We will strengthen AML/CFT through beneficial ownership registers by January 2026 and have already enacted the Proceeds of Crime law with a dedicated police unit.

¶ 34 We will wage a national campaign against drugs and organized crime—breaking supply chains, weakening networks, expanding education and rehabilitation, and providing jobs—to build a safe, just, protected society.

¶ 35 We thank bilateral and multilateral partners and the Central Bank. Through this second Budget, building on the foundation of the first, we seek a rapid leap in our economy along the path “Prosperous Nation, Beautiful Life,” and call for the cooperation of all.

¶ 36 Medium-term strategy: - Stable, inclusive growth above 7% sharing benefits across regions and groups; productivity and innovation-led private investment; transparent FDI; integrating into global value chains; PPP-led infrastructure with efficiency and accountability. - Export diversification under the National Export Development Plan (2025–2029); review and negotiate trade agreements via an expert group; establish a National Export Financing/Facility and a National Trade Council; develop trade facilitation including a National Single Window (Rs. 2,500 million). - Debt sustainability: total financing needs below 13% of GDP medium term; external debt service ≤4.5% of GDP; debt-to-GDP trending to ≤90% by 2032. 2028 external service USD 3,259 million—manageable. Governance-linked bonds include incentives: if revenue targets (15.3% and 15.4% of GDP in 2026–27) and Fiscal Strategy Statement publication are met, a 0.75% interest reduction applies 2028–2035, yielding USD 7.9 million annual savings. - Strengthen the productive economy: import substitution where viable; support SMEs with concessional credit, guarantees, and value-chain finance; invest in infrastructure and skills via PPPs. - Eradicate rural poverty: a “No One Left Behind” national program—market access, infrastructure, planned urbanization, education, health—aligned with SDGs and a strong social safety net. - Digitization: invest over Rs. 25,500 million in 2026 for GovPay expansion, National Cyber Security Operations Center, digital consular services, GovTech company, and the forthcoming Digital Economy Authority; expand broadband, attract data centers (Rs. 500 million), AI/cloud/data infrastructure (Rs. 3,000 million), start an AI program (Rs. 750 million), e-payments (waive e-payment service charges for government from Jan 1, 2026; promote QR with fee waivers under Rs. 5,000), issue SL Unique Digital ID from 3Q2026, and provide broadband vouchers for Aswesuma and low-income students; five-year tax holiday for new telecom towers; a Rs. 1,500 million startup fund; and a Virtual Special Economic Zone under BOI.

¶ 37 Private sector and investment ecosystem: - Amend SDPA and Port City law to create a robust, predictable incentive regime and compliance framework; enact PPP law early 2026; introduce Investment Protection Act early 2026; develop service zones near investment zones (additional Rs. 1,000 million; total Rs. 2,000 million); resolve stalled tech parks (Kurunegala and Galle) by settling Rs. 1,500 million in bank dues and opening for private investment; establish tech parks in Thihagoda/Digana and Nuwara Eliya under BOI; introduce residence visas for qualifying FDI; implement a BOI single-window e-clearance (Rs. 100 million); develop a centralized digital land database and new land release law (Rs. 100 million); bring a holding company law for state equity in SOEs in early 2026; expedite FTAs through a Cabinet-appointed expert group; boost EDB programs (additional Rs. 250 million for NEDP start-up actions; Rs. 250 million for trade fairs, certification, e-marketing).

¶ 38 SME finance and value chains: - National Credit Guarantee Institution delivering collateral-free lending: Rs. 4,027 million guaranteed in 2025 YTD; target Rs. 7,000 million in 2026 (ADB USD 50 million support). - Rs. 25,000 million for SME working capital/investment loans up to Rs. 25 million; Rs. 5,900 million to enable loans up to Rs. 50 million; sectoral schemes: Rs. 1,700 million interest subsidy for crop loans up to Rs. 3 million; Rs. 7,700 million for SME concessional loans up to Rs. 50 million; Rs. 6,200 million concessional loans up to Rs. 50 million for agri value chains; Rs. 15,000 million mortgage-backed concessional loans for SME rice millers; Rs. 800 million to establish a Sustainable Farmers Credit Fund. Additional allocations for youth entrepreneurship, microfinance, women entrepreneurs; total concessional/guaranteed/refinance envelope of Rs. 80,000 million in 2026. - Extend capital allowance incentive to SMEs by lowering the minimum qualifying investment from USD 3 million to USD 250,000.

¶ 39 Tourism: - Target USD 8 billion receipts and 4 million arrivals by 2030; restructure tourism institutions; invest in nature- and heritage-based sites (Rs. 3,500 million from SLTDA funds), including coastal and waterway assets (e.g., Hamilton Canal, Muthurajawela environs); upgrade Uva’s Haputale–Beragala–Idalgashinna cluster with public infrastructure and promotion; commercialize 900+ underutilized public holiday bungalows/guest houses with private participation; address human capital gap via short courses through SLITHM and accredited public/private institutes (Rs. 500 million from tourism development funds); develop Beira Lake as a signature urban attraction (Rs. 2,500 million from funds); complete Hingurakgoda domestic airport; upgrade Sigiriya and Trincomalee airfields and expand Jaffna International (Rs. 1,000 million plus Civil Aviation Authority support); restart BIA Phase II works in early 2026; progress SriLankan Airlines debt restructuring for a viable fleet and services; position Sri Lanka as a regional transit hub between East and West.

¶ 40 Research, development, and innovation: - Finalize Government R&D Policy and establish a National R&D and Commercialization Agency and a National R&D Council; Rs. 1,200 million to take research through commercialization pipelines.

¶ 41 Clean Sri Lanka program: - A continuous, nationwide initiative to build a clean country in every sense: drug-free, underworld-free, corruption-free, free of power-drunk corrupt politicians, with an efficient public service and rule of law. Rs. 6,500 million allocated.

¶ 42 National operation against drugs: - A whole-of-country effort to break supply chains, dismantle networks, expand education and rehabilitation, and protect our youth and society from this pervasive threat.