Sri Lanka recorded a budget surplus of Rs. 9.5 billion during the first half of 2026, marking a dramatic turnaround from the Rs. 405.6 billion deficit posted during the same period last year.
The improvement, disclosed in the Finance Ministry's Fiscal Review Report, covers the period between January and June 2026 and reflects a sharp rise in state revenue collection alongside more moderate growth in government spending.
Total government revenue and grants climbed by 27.1 per cent year on year to reach Rs. 2.95 trillion, equivalent to 55.8 per cent of the Rs. 5.3 trillion annual estimate.
Tax revenue accounted for the bulk of this growth, expanding by 25.9 per cent to Rs. 2.71 trillion and achieving 55.2 per cent of the full year target of Rs. 4.9 trillion.
Non-tax earnings performed even more strongly, surging by 43.6 per cent to Rs. 243.6 billion and fulfilling 67.7 per cent of the projected Rs. 360 billion.
Grants, however, fell sharply, dropping by 46.4 per cent to just Rs. 1.8 billion, or 6 per cent of the Rs. 30 billion target.
On the expenditure side, total state spending rose by 7.9 per cent to Rs. 2.94 trillion, representing 39.0 per cent of the Rs. 7.5 trillion annual projection.
Recurrent spending increased by 6.5 per cent to Rs. 2.66 trillion against a target of Rs. 5.8 trillion, reaching 45.7 per cent of the goal. Capital expenditure and net lending grew by 23.6 per cent to Rs. 276.6 billion, fulfilling 16.1 per cent of the Rs. 1.7 trillion estimate for the year.
The primary balance, which excludes interest payments, registered a surplus of Rs. 1.24 trillion, up from Rs. 859 billion recorded in the corresponding period of 2025.
Among revenue collecting agencies, Sri Lanka Customs led overall performance, generating Rs. 1.29 trillion and achieving 58.5 per cent of its Rs. 2.2 trillion annual estimate.
The Inland Revenue Department collected Rs. 1.24 trillion, meeting 52.0 per cent of its Rs. 2.4 trillion goal, while the Excise Department collected Rs. 138 billion, reaching 56.5 per cent of its Rs. 245 billion projection. Other revenue streams contributed Rs. 35.0 billion, fulfilling 60.1 per cent of the annual Rs. 58 billion target.
The figures point to a marked strengthening of Sri Lanka's fiscal position halfway through 2026, offering the government greater room to manage debt obligations and public spending commitments in the months ahead.
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