Primary surplus surges 170% as Budget deficit narrows sharply in 2025: CBSL

Monday, 23 March 2026 04:14 - - {{hitsCtrl.values.hits}}

Sri Lanka’s fiscal position strengthened in 2025, with a sharp rise in the primary surplus and a significant narrowing of the overall budget deficit, according to data from the Central Bank of Sri Lanka (CBSL).

Despite the encouraging fiscal outcome last year, the outlook for 2026 is dampened by downside risks from external shocks, including Cyclone Ditwah and the ongoing Middle East conflict.

Fitch Ratings last week said it did not expect Sri Lanka’s sovereign rating to face severe downside pressure from the ongoing global energy shock linked to the escalating Middle East conflict, although it could blunt recent improvements in credit metrics (https://www.ft.lk/top-story/No-severe-sovereign-rating-downside-risk-for-SL--Fitch/26-789781).

The primary surplus rose by 170.30% to Rs. 1,755.81 billion in 2025 from Rs. 649.57 billion a year earlier, reflecting stronger revenue mobilisation and contained expenditure growth.

The overall budget deficit narrowed by 63.49% to Rs. 744.86 billion from Rs. 2,039.93 billion in 2024.

Government revenue and grants increased by 34.09% to Rs. 5,485.55 billion, driven largely by a 36.30% rise in tax revenue to Rs. 5,049.19 billion. Non-tax revenue grew by 22.67% to Rs. 400.21 billion, while grants declined by 39.72% to Rs. 36.15 billion.

Total expenditure and net lending rose marginally by 1.63% to Rs. 6,230.41 billion. Recurrent expenditure declined by 2.01% to Rs. 5,232.39 billion, while capital expenditure and net lending increased by 26.21% to Rs. 998.03 billion.

The data point to continued fiscal consolidation, supported by stronger revenue performance and restrained recurrent spending.

Total outstanding Government debt amounted to Rs. 29.9 trillion as of end-December 2025, up from Rs. 28.7 trillion a year ago.

Outstanding foreign debt increased from Rs. 10.4 trillion to Rs. 11.3 trillion, while domestic debt was up from Rs. 18.3 trillion a year ago to Rs. 18.7 trillion as at end-December 2025.