State revenue, reserves hit record highs in 2025 as fiscal discipline strengthens: Ministers

Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando and Economic Development Deputy Minister Nishantha Jayaweera

Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando yesterday said the country will record its strongest-ever performance in State revenue and tax collection in 2025, alongside a sharp improvement in foreign reserves and public finance indicators. He described it as a decisive turnaround in fiscal management.

Addressing the year’s economic outcomes, Dr. Fernando said 2025 marked a historic milestone, with State and tax revenue surpassing the highest targets ever achieved. “2025 is a year in which State revenue and tax revenue exceeded the highest target in history,” he said, attributing the performance to tighter fiscal discipline and renewed public confidence in governance.

Foreign exchange reserves have already exceeded $ 7 billion during the first 11 months of the year and are expected to surpass the previous all-time high of $ 7.24 billion by year-end. Export earnings also showed resilience, crossing $ 15.8 billion during the same period, despite what Dr. Fernando described as significant internal and external challenges faced throughout 2025.

He acknowledged that the Government’s decision to increase public sector salaries and recruit new employees has raised recurrent expenditure by about Rs. 220 billion. However, he defended the move as necessary to maintain the delivery of essential public services and strengthen State capacity, arguing that the additional costs were managed within an overall framework of fiscal discipline.

Dr. Fernando said the improvement in public finance management reflects the Government’s commitment to restoring fiscal credibility while ensuring that development activity continues into 2026. “Our longer-term objective of raising Government revenue to 20% of GDP remains achievable,” he said, provided confidence in fiscal governance continues to strengthen.

According to him, the surge in tax revenue was driven largely by the restoration of trust between the State and taxpayers. He noted that compliance improves when citizens see taxes being used responsibly for national development, rather than through coercive enforcement alone.

Economic Development Deputy Minister Nishantha Jayaweera said all three major State revenue-generating institutions exceeded their targets in 2025, delivering total Government revenue of over Rs. 4.5 trillion. “This included Rs. 2,195 billion from the Inland Revenue Department (IRD), Rs. 2,115 billion from Sri Lanka Customs, and Rs. 242 billion from the Excise Department,” he added.

He said the IRD surpassed its 2025 target by Rs. 30 billion, recording the highest revenue performance in its recent history. Sri Lanka Customs exceeded its annual target by a substantial Rs. 394 billion, making it the single largest contributor to State revenue during the year.

Deputy Minister Jayaweera stressed the importance of simplifying the tax system to make compliance more convenient and reasonable, while ensuring that all eligible taxpayers are brought into the net. He reiterated that sustainable revenue growth depends on broadening the tax base rather than placing excessive pressure on a limited group of taxpayers.

Highlighting improvements in cash management, the Government said the Treasury, which in previous years had been operating with bank overdrafts ranging from Rs. 200 billion to Rs. 800 billion, has now been strengthened to a cash surplus of Rs. 2.2 trillion. “This improved liquidity position enabled Parliament to approve a Rs. 500 billion Supplementary Estimate without destabilising public finances,” he added.

He also pointed out that 2025 recorded the lowest budget deficit since 1976, while the primary account balance turned positive at 3.2%. Historically, Sri Lanka has recorded a positive primary balance only six times, and those instances were typically below 1%.

Jayaweera said the improved fiscal position was supported by stronger tourism earnings, export revenue, foreign workers’ remittances and foreign direct investment inflows, reinforcing the Government’s assessment that the economy is on a firmer footing as it moves into 2026.