*First Capital Research | 07-Nov-2025 | National Budget 2026 Highlights*
*Economy*

Plan to reduce Debt-to-GDP to 87% by 2030.

The government acts with the target of achieving 7% economic growth in the medium term.

Efforts are underway to raise revenue to 15.4% of GDP by 2026.

Budget deficit to be reduced to 5.1% in 2026.

With the view of broadening the tax base, the annual turnover threshold for VAT and SSCL registration will be reduced from LKR 60Mn to LKR 36Mn, effective 1 April 2026.

The SSCL on vehicle sales will be collected at the point of import or manufacture instead of after-sales, to improve compliance. Effective April 2026.

Customs Import Duty rates will be revised from 0%, 15%, 20% to 0%, 10%, 20%, 30% in line with the National Tariff Policy, effective April 2026. A phased plan will be implemented to gradually remove para-tariffs with minimal revenue impact.

The borrowing limit in the Appropriation Bill (presented on 26 Sep 2025) will be reduced by LKR 60Bn to LKR 3,740Bn, reflecting revised revenue estimates under the 2026 Budget.
*Healthcare*

LKR 4.2 Bn allocated for Suwasariya Ambulance Service.

LKR 1,500Mn to be allocated for the pilot project to introduce Primary healthcare centres.

LKR 200 Mn allocated for the initial work to establish a National Cardiologic Hospital in Colombo.
*Education*

The Mahapola Scholarship will be increased by LKR 2,500

LKR 50Mn will be allocated to provide LKR 5,000 for differently-abled children for their educational needs.
*Construction*

LKR 24,000Mn allocated to construct rural roads and LKR 2,500Mn for rural bridges.

Allocation of LKR 16,000Mn for the construction of the Rambukkana-Galagedara section of the Central Expressway.

LKR 1,000Mn allocated to complete land acquisition of the Kurunegala-Dambulla Expressway.

1,500Mn allocated for ongoing land acquisition and reassessment of the access road following halted construction of the Ruwanpura Expressway (Kahathuduwa to Ingiriya)
*Digitization*

LKR 25,500Mn to be invested in 2026 to develop the digital economy, and a Digital Economy Council to be established.

The government plans to introduce an e-procurement system soon.

The first digital ID card is set to be issued by 3Q 2026.

All government payments will be brought under a digital payment system. No service charges will be imposed for online payments.

A virtual economic zone will be established to promote investments.

A five-year tax concession will be granted for digital communication towers.

Service fees will be waived for transactions below LKR 5,000 made through QR codes.

The government has announced measures to install 100 new telephone towers across the country.
*Export/Import and Trade*

LKR 250Mn will be allocated to the Export Development Board to promote and facilitate exports.

LKR 1,000Mn allocated for the development of services related to investment zones.
Colombo Port City Economic Commission Act to be amended.
*Tourism*

Residence visa system to be introduced for tourists.

State bungalows will be turned into profitable ventures under a Public-Private Partnership. A total of 900 such buildings have been identified.

The Bandaranaike International Airport (BIA) expansion project will commence next year.

LKR 1,000Mn will be allocated to develop the Hingurakgoda, Sigiriya, and Trincomalee domestic airports, and to expand operations at Jaffna Airport.
*Women and Child Empowerment*

LKR 240Mn allocated to uplift self-employment, household industries, etc., carried out by women entrepreneurs across the island at the Divisional Secretariat level. In addition to this, an additional LKR 200Mn is proposed to be allocated for programmes aimed at the welfare of women.
*Agriculture*

LKR 800Mn is proposed to be allocated to establish a sustainable Agricultural Loan Fund.

LKR 91,700Mn allocated to uplift irrigation.
*Industries*

LKR 5,900Mn has been allocated to provide loans of up to LKR 50Mn to Small and Medium sized Enterprises.

Daily wage for estate workers to be increased from LKR 1,350 to LKR 1,550 by January 2026, it is proposed to pay LKR 200 as a daily attendance incentive by the government.

LKR 25,000Mn has been allocated to provide loans at concessional interest rates of up to LKR 25Mn to a successful business and up to LKR 15Mn to businesses facing economic difficulties for working capital needs and investments of small and medium scale entrepreneurs.
*Energy*

An Energy Transition Act will be introduced next year to provide the required legal framework towards the modernization of electricity transmission and distribution.
*Social Welfare*

LKR 6,500Mn has been allocated to the Clean Sri Lanka Initiative.

LKR 20,750Mn earmarked for increasing the total allocation for "Praja Shakthi Program" for district and divisional-level implementation.

LKR 86Bn has been allocated for the implementation of drinking water supply projects as well as community water supply projects.
*Public Sector*

Urban development projects to follow a formal, study-based plan starting in 2026. LKR 2,000Mn allocated to commence preliminary feasibility studies for 10 identified cities.

A special task force will be appointed to review the management and use of government-owned lands.

Under the Urban Regeneration Project, LKR 15,000Mn allocated for constructing houses in Colombo and its suburbs for 2026.

Allocation of LKR 12,500Mn for the provision of vehicles/machineries required for Government Institutions and Provincial Councils.

The distress loan limit for public servants has been raised from LKR 250,000 to LKR 400,000 at 4.2% interest. LKR. 10,000Mn allocated for disbursement.

Approval has been given to recruit nearly 75,000 people under a proper system.
*Private Sector*

With the aim of encouraging private employers and increasing employment, if persons with disabilities are employed in the private sector, it was proposed to pay a wage subsidy of 50% of the employees’ salary, subject to a maximum of LKR 15,000, for up to 24 months. It was proposed to allocate LKR 500Mn for this purpose.
*Sri Lankan Airlines*

The US$ 210Mn debt component of Sri Lankan Airlines would be restructured this year.
*General*

LKR 2,000Mn of the Foreign Employment Bureau will be allocated to introduce a contributory pension scheme for migrant workers in 2026.

LKR 800Mn allocated for the promotion of sports culture.
*-First Capital Research-*