Sri Lanka’s govt. revenue expected to decline in 2026 – Finance Ministry

Sri Lanka’s total government revenue is expected to decline in 2026 compared to 2025, according to the Ministry of Finance.The projection, published in the Fiscal Strategy Statement 2027, estimates that total government revenue, including grants, will fall from 16.7% of GDP in 2025 to 15.8% of GDP in 2026.The Ministry attributed the expected decline mainly to the normalization of revenue collection following the one-off surge in tax income generated by the resumption of vehicle imports in 2025.The statement also noted that government revenue had dropped to 8.4% of GDP in 2022 during the economic crisis, one of the lowest levels globally.It added that subsequent tax policy measures and revenue administration reforms have broadened the tax base while helping to reduce tax evasion and revenue leakages.However, the Ministry cautioned that geopolitical tensions in the Middle East, disruptions to global trade, and potential instability in energy markets could pose challenges to achieving future government revenue targets.