Sri Lanka’s fiscal performance showed a sharp turnaround in 2025, with the budget deficit more than halving by September as stronger tax revenues and import duties boosted government income, according to the Finance Ministry’s latest Fiscal Review Report.
1. Budget Deficit: The deficit dropped 54.5% year-on-year to Rs. 441.4 billion in January–September 2025, from Rs. 970 billion during the same period last year.
2. Primary Account Surplus: The surplus more than doubled to Rs. 1.4 trillion reflecting improved fiscal balance excluding interest payments.
3. Revenue Growth: Total revenue rose 31% year-on-year to Rs. 3.83 trillion, driven mainly by higher VAT and import-related collections.
4. Customs Collections: The Customs Department earned Rs. 1.7 trillion, meeting 80% of its annual target and accounting for nearly half of total tax revenue.
5. Expenditure: Total government spending increased 10% to Rs. 4.3 trillion, mainly due to recurrent expenditure of Rs. 3.8 trillion. Capital spending fell 2% to Rs. 455 billion as interest costs rose to Rs. 1.9 trillion.
6. Vehicle Import Taxes: Revenue from vehicle imports soared 818% year-on-year to Rs. 349 billion, up from Rs. 38 billion a year earlier.
7. Import Value: The total value of motor vehicle imports is projected to reach USD 1.5 billion by year-end, up from an earlier estimate of USD 1.2 billion, according to the Central Bank.
The International Monetary Fund (IMF), in its October review, praised the improving fiscal performance but urged continued reforms to maintain revenue momentum and discipline in spending. Approval of a 2026 Budget aligned with IMF program goals will determine the release of the next tranche under the $3 billion Extended Fund Facility. (Newswire)