Budget 2026 and SMEs

THE 2026 National Budget, presented by President Anura Kumara Dissanayake, comes at a pivotal moment for Sri Lanka’s economy.

- By Rifka Ziyard

President and Finance Minister Anura Kumara Dissanayake

Following two years of IMF-led reforms and a steady recovery trajectory, the Government has set ambitious goals: sustained GDP growth above 7%, fiscal consolidation, and integration into global value chains. But for the backbone of the economy—Small and Medium Enterprises (SMEs)—the question remains: Has the Budget 2026 provided sufficient support to drive resilience and growth?SMEs contribute over 52% of Sri Lanka’s GDP and play a critical role in employment generation. Their ability to thrive determines the pace of economic recovery and inclusive growth. However, SMEs have faced severe challenges since the 2022 crisis—tight credit conditions, high inflation, and limited market access. Budget 2026 needed to address these structural issues while fostering competitiveness.

1. Lower investment threshold for tax incentives