Cyclone Ditwah hits 2026 Budget

Govt. recasts 2026 Budget estimates; sharp deficit, cash surplus deterioration

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President and Finance Minister Anura Kumara Dissanavake

THE Government's fiscal position under the 2026 Budget has weakened sharply following the approval of a Rs. 500 billion Supplementary Estimate to fund post-Cyclone Ditwah recovery, according to a Finance Ministry report released after Parliamentary approval on 19 December.

The Budget deficit for 2026 has been revised upward to 6.5% of GDP from the earlier estimate of 5.1%, marking a further deterioration from the 4.5% of GDP deficit projected for 2025.

At the same time, the primary surplus forecast for 2026 has been cut to 1% of GDP from the previously estimated 2.5%, and well below the 3.8% surplus recorded in 2025.

The revisions were disclosed in a report published under the Public Financial Management Act, No. 44 of 2024, following Parliament's approval of the supplementary spending allocation.

Total revenue and grants remain unchanged at 15.4% of GDP in 2026, marginally lower than the 15.9% projected for 2025.However, total expenditure has risen to 21.9% of GDP for 2026 from the earlier estimate of 20.5%, which was unchanged from both 2024 and 2025.

Recurrent expenditure for 2026 has been revised up to 16.9% of GDP from 16.5%, although it remains below the 17.9% and 17.3% of GDP recorded in 2024 and 2025, respectively.