Challenging revenue targets for 2026 amid rigid spending and weak welfare coverage: Economist

Dr. Roshan Perera urges continued fiscal discipline beyond IMF program

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ECONOMIST Dr. Roshan Perera yesterday cautioned that the country's revenue targets may be difficult to achieve amid limited new tax measures, rigid recurrent spending and a still fragile post-crisis recovery where poverty remains above 20%.

Speaking at the Daily FT–Colombo University Alumni Association post-Budget forum panel discussion, former Central Banker commended the 2026 Budget’s continuation of macroeconomic stability measures, but warned that maintaining fiscal prudence after the IMF program ends will be the real test of policy credibility.

“Given Sri Lanka’s past experience with IMF programs, new Government’s often relax their fiscal discipline once the program ends. Thus continuing this framework is a commendable achievement, but we must ensure the commitment remains even after phasing out of the IMF arrangement,” she stressed.

Dr. Perera noted that Sri Lanka has rarely recorded primary surpluses in its post-independence history, with only a handful of instances in the 1950s, 1992, 2017, and 2018.

In recent years, however, the country has recorded three consecutive primary surpluses and is Budgeting for another in 2026, which she described as “a positive signal of renewed fiscal discipline.”

“It’s interesting that in almost every instance where we achieved a primary surplus, Sri Lanka was either under an IMF program or had just come out of one. That tells you how contingent this fiscal discipline is on external oversight,” she observed. She insisted on the need to sustain primary surpluses till debt becomes truly sustainable, urging policymakers not to relax consolidation efforts prematurely.