Sri Lanka to present 2027 budget before IMF program ends — Channel NewsAsia

Sri Lankan President Anura Kumara Dissanayake, who is also responsible for the country's finances, will present the 2027 budget on November 12. The authorities expect the document to convince investors that the country's economy can sustain its recovery after the completion of the four-year, $2.9 billion International Monetary Fund program. This was reported by Channel NewsAsia.

The budget is expected to lay the groundwork for Sri Lanka's return to the bond market after it exits the IMF program in March. The government's key task will be to shift from crisis stabilization to more active investment and economic growth without weakening fiscal discipline.

Government targets

In 2025, the country recorded a primary budget surplus of 5.4% of GDP. For 2027, the government plans a primary surplus of 2.6% of GDP and a reduction of the overall deficit to 4.5% of GDP. The target for revenue and grants is 15.5% of GDP, including tax revenue expected to reach 14.2% of GDP. At the same time, public investment is planned to remain above 4% of GDP.

Since 2022, Sri Lanka has moved from a foreign currency shortage, problems importing fuel, food and medicines, and a default on external debt to rebuilding foreign exchange reserves and economic growth. The country's economy expanded for 12 consecutive quarters, while gross official reserves stood at $6.9 billion at the end of October.

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Inflation and borrowing costs

The government is also under pressure due to accelerating inflation amid rising energy prices following the war of the United States and Israel with Iran. In October, inflation in Colombo accelerated to 8.3%. The authorities have already introduced fuel and electricity subsidies, cash assistance for low-income households, and support for farmers and fishers.

The World Bank expects Sri Lanka's economy to grow by 4.4% this year and by 4.2% in 2027, but describes the recovery as incomplete and uneven. The poverty rate, estimated at 16.9% in 2025, still exceeds pre-crisis levels. Fitch Ratings upgraded the country's rating to B- from CCC+ in September, but warned that the debt burden and debt-servicing costs remain high.

Economist and former deputy central bank governor W. A. Wijewardena suggested that the cost of Sri Lanka's new borrowing could be 11–12%, calling such rates unaffordable for the country.