Benchmarking National Budget 2026 and making theatrics of cheerleaders superfluous

The Sri Lankan National Budget for 2026 is poised to be a pivotal document, arriving at a critical juncture in the nation’s economic recovery and reform agenda

Sri Lanka’s National Budget will be unveiled on 7 November 2025, and I hope it will be significantly different from the predictable rhetoric and theatrics we have heard and witnessed in the past. This is the first fully fledged Budget of the National People’s Power Government. Typically, on ‘Budget Day,’ the curtains will draw, and the minister of finance will step up and deliver a string of promises which, in hindsight, could have easily found their place in Ripley’s “Believe It or Not.” 

Yet, that is not as bad as the excruciatingly painful theatrical farce which follows the ‘Budget Speech,’ this being the cacophony of opinions from “cheerleaders,” keen to curry favour with the government in power. The chambers of commerce, business associations, professional bodies, corporate leaders, professionals, self-proclaimed pundits, and other vaguely authoritative figures would appear on cue to deliver press releases and ‘polite’ statements that sound like those from the previous year and the many years before, spewing the same tired lexicon of mandatory praise. Some organisations and individuals do provide objective assessments. But sadly, they are more the exception than the norm.

Through boom, bust, civil war, COVID, and economic implosion, it is very evident that our business aristocracy has perfected the art of conditional commendation. Their utterances are masterpieces of linguistic gymnastics, designed to praise the Government just enough to maintain access, yet vague enough to claim technical neutrality, should the entire fiscal scaffolding collapse. They are like weathervanes fixed perpetually to point towards ‘political expediency,’ regardless of whether a gale of genuine reform or a light puff of populist fluff is blowing.

Year after year, the Budget is monotonously hailed, and praised, for its “bold commitment to digitalisation,” and yet state-owned enterprises continue to function on carbon paper and long waiting periods. It is praised for its priority on “export-led growth,” and still, there is failure on the part of authorities to simplify procedures/processes, address the inadequacy of basic infrastructure, and unblock logistical bottlenecks that frustrate every single entrepreneur striving to increase exports and trying to ship a container. Every year, it is lauded for its promise to broaden the tax net and yet the same taxpayers continue to carry the burden. The Budget utterances exude a warm feeling of expectancy, but the execution is coldly short of promises.

Cheerleaders

Against this background of repeated ‘let-downs,’ it is not difficult to conclude that the praises of the ‘cheerleaders’ are artfully architected, and that the ‘cheerleaders’ know it. Their annual theatrics of optimism are not acts of national solidarity but are, in the main, acts of self-preservation masquerading as statesmanship.

After years of grinding hardships imposed upon them through economic mismanagement, corruption, disregard for the rule of law, cronyism, and nepotism, the populace of this country, the common man and woman, deserve to be better informed about the national Budget. They deserve to be apprised of its pros, cons, challenges, and inherent risks, and to be better sensitised about the positive and negative impacts of the Budget and its potential for tangible improvement in their lives and the lives of their fellow citizens, the farmers, vendors, small business owners, and salaried workers. The Budget must be a signal of their future.

This Budget cannot simply be a collection of fiscal adjustments. It must be a comprehensive, citizen-centric plan for sustainable recovery and equitable growth. In a document of this significance, citizens must look for clarity, commitment to reform, and a balanced approach that manages fiscal discipline while fostering inclusive growth. It is an act of prioritising structural reform over short-term political expediency

So, let us not allow the National Budget 2026 to be another patchwork of populist gestures hidden behind technical jargon and theatrics. Let us, as citizens, demand a Budget that is radically honest, transparently accountable, and fundamentally geared toward national, rather than private, prosperity. Let us be positioned to critically evaluate the proposals and assess them objectively and not be wrong-footed by professional glossing and the carefully selected vague, laudatory adjectives of ‘cheerleaders.’ When a substantial number of business and corporate elites and professionals, the guardians of economic reason, are unable or unwilling to call a spade a shovel, we, the citizens, must devise our own methods of assessing the appropriateness and relevance of the Budget.

Establish a benchmark for National Budget 2026

With that as our goal, let us establish a benchmark for the National Budget 2026, a benchmark against which we can evaluate the key Budget proposals. This, admittedly, is just the first step of a longer process because the extent of its implementation will only be known at the specified milestone dates and at the end of the Budget period. Verite Research, the Advocata Institute and various websites will give us running updates and commentaries once the game starts! 

This article highlights what I, as a Sri Lankan citizen deeply invested in the nation’s future, expect from the forthcoming financial blueprint – a set of demands focused on long-term stability, transparency, and social justice. You can establish your benchmarks. This is not about passive hope. It is about defining accountability.

The Sri Lankan National Budget for 2026 is poised to be a pivotal document, arriving at a critical juncture in the nation’s economic recovery and reform agenda. Following years of instability and a major debt default, citizens are looking beyond mere survival measures toward a sustainable, equitable, and growth-oriented future. It must be a statement of national priorities and a blueprint for the next phase of development. The prevailing economic circumstances must not be read as mere statistics but must be seen as the representation of the daily burdens of the ever-rising cost of living, the challenges faced by small businesses, the frustrations of big business and the uncertainty facing our youth. 

This Budget cannot simply be a collection of fiscal adjustments. It must be a comprehensive, citizen-centric plan for sustainable recovery and equitable growth. In a document of this significance, citizens must look for clarity, commitment to reform, and a balanced approach that manages fiscal discipline while fostering inclusive growth. It is an act of prioritising structural reform over short-term political expediency. 

The success of Budget 2026 must be measured against its ability to deliver on four non-negotiable pillars, being Fiscal Discipline and Revenue-led Consolidation, Pro-Growth and Pro-Competitive Structural Reforms, Human Capital and Social Resilience Investment, and Good Governance and Public Sector Efficiency. For us, the common folk, the scrutiny of this budget must be directed towards key areas that will fundamentally impact on our livelihoods, social security, and long-term economic prospects. These four pillars form the essential benchmark—the “wish-list” against which every citizen, investor, and development partner must judge the sincerity, feasibility, and long-term impact of the 2026 Budget. Just shut out the theatrics of ‘cheerleaders’ and draw your conclusions.

1. Fiscal discipline and revenue-led consolidation

I have never been a fan of the International Monetary Fund (IMF). It is the irresponsible, and reckless, behaviour of Sri Lanka’s leaders that made us servile the IMF. But, having gotten there, we must display an unwavering commitment to fiscal responsibility in keeping with the targets set in the Medium-Term Fiscal Framework (2026-2030) and the IMF Extended Fund Facility (EFF) program. Complacency, post-stabilisation, must not be allowed to set in!

1A. Robust and equitable revenue generation

The primary measure of fiscal success is the government’s ability to fund its operations and debt obligations sustainably. 

• Tax-to-GDP ratio target: The budget must present a credible and legislatively supported plan to increase the tax-to-GDP ratio to above 15% in the medium term. This requires more than mere increases in existing rates.
• Broadening the tax base: The Budget must propose the elimination of all non-essential tax exemptions and holidays, which disproportionately benefit specific groups and distort the economy. Foreign Direct Investments (FDIs) are not solely tax driven. A transparent, rules-based system with minimal discretion is mandatory. Assets and Liability Declarations must be mandated.
• Progressive taxation: A clear shift towards Direct Taxes is vital for equity. This includes:
• Reform of capital gains tax: The Capital Gains Tax must be broadened to capture income and wealth from sources other than those currently prescribed.
• Property and wealth taxation: Annual wealth tax does more harm than good. Therefore, not advocated. Addressing inequality and enhancing opportunity are more appropriate. Wealth is a powerful driver of human endeavour. However, a ‘one-off’ wealth tax may work if linked to a clearly stated purpose and would help in lowering the burden of Indirect Taxes.
• Digital tax administration: Significant investment must be set aside to digitising tax collection (Inland Revenue, Customs, Excise), in widening the tax net, fortifying tax compliance, reducing corruption, and making tax payment easier for citizens and businesses.

1B. Prudent expenditure management

While revenue rises, expenditure must be rigorously controlled and quality focused.

• Primary surplus commitment: The budget must adhere to the primary surplus target of 2.3% of GDP to ensure continued debt reduction and restoration of fiscal buffers.
• Project prioritisation and arrears clearance: Public capital expenditure must be strictly rationalised, prioritising the completion of high-impact, ongoing projects (like BIA expansion) over initiating new, white-elephant schemes. Explicit budgetary allocations must be made to settle verified domestic arrears to restore private sector liquidity.
• Public sector reform: A measurable plan for rationalising the size and cost of the public sector must be included, focusing on efficiency, digitisation of services, and a simplified, merit-based compensation structure rather than blanket, across-the-board salary increases that burden the Treasury.
• Continuation of fiscal controls: The freeze on new state vehicle purchases (except for essential services like health and public transport) and non-essential foreign training must continue, symbolising the Government’s discipline.

2. Pro-growth and pro-competitive structural reforms

Fiscal consolidation must not throttle growth. Budget 2026 must function as an accelerator for a high-growth trajectory, shifting the economy from consumption-led to investment and export-led growth.

2A. Creating a competitive business environment

Sri Lanka’s biggest barrier to growth is the complexity and high cost of doing business.

• Reform agenda: The budget must earmark funds and legal commitments to drive rapid reform across all institutions to improve the country’s ranking in global business indices significantly. This means creating a national task force with quarterly, publicly reported milestones.
• Investment facilitation: Legislate and fully operationalise a national single window for trade and investment, consolidating all regulatory approvals under a genuinely empowered one-stop shop (e.g., a modernised BOI). Statutory timelines for approval must be enforced with punitive action for non-compliance.
• Trade liberalisation: Commit to the phasing out of all non-tariff barriers and para-tariffs (such as the CESS levy) that hinder exports and increase import costs, making local industries not strive for increased productivity. Dedicate resources to accelerate Free Trade Agreement (FTA) negotiations.

2B. Sectoral focus for export and FDI

Strategic investment in key sectors is paramount to attract high-quality Foreign Direct Investment (FDI) and boost exports.

• Digital economy: Mandate and allocate funds for the accelerated rollout of the National Digital ID and a coordinated, nationwide 5G broadband infrastructure expansion to expand the digital services economy and enable digital trade. Foster an enabling environment for data centre investments.
• Agriculture and livestock: Shift budget allocations from subsidies to investment in mechanisation, technology transfer, climate-resilient farming, and the establishment of high-value agricultural export zones. Special emphasis and financing schemes must be created to transform local dairy and livestock production into formal, commercial industries.
• Tourism infrastructure: Allocate capital for the expedited completion of key infrastructure, notably the BIA terminal expansion and key highways, coupled with a significant, high-impact global marketing campaign and the development of high-value niche tourism (cultural, ecological).

3. Human capital and social resilience investment

Sustained growth is impossible without a skilled, healthy populace and a robust safety net for the vulnerable.

After years of grinding hardships imposed upon them through economic mismanagement, corruption, disregard for the rule of law, cronyism, and nepotism, the populace of this country, the common man and woman, deserve to be better informed about the national Budget. They deserve to be apprised of its pros, cons, challenges, and inherent risks, and to be better sensitised about the positive and negative impacts of the Budget and its potential for tangible improvement in their lives and the lives of their fellow citizens, the farmers, vendors, small business owners, and salaried workers. The Budget must be a signal of their future

3A. Education and skills for the future

Budget 2026 must recognise that the next crisis will be one of human capital deficit.

• Skills over degrees: Drastically re-prioritise recurrent and capital expenditure towards Vocational and Technical Education (VET), linking VET curricula directly to the demands of the export-oriented, digital economy (e.g., IT, renewable energy, advanced manufacturing).
• University-industry linkages: Create incentive schemes and grants to encourage greater research and development (R&D) in universities, linked to private sector innovation, and enforce return-of-service obligations for state-funded scholarships to retain skilled human capital domestically.

3B. Targeted social protection

Fiscal reform must not compromise the vulnerable.

• Targeting and coverage: The World Bank estimates that twenty-two per cent of Sri Lanka’s population lives below the poverty line. Fully fund and implement the new, targeted social safety net programs, ensuring transparent administration and adequate coverage for the genuinely poor and vulnerable. This requires accelerating the completion of the national social registry. 
• Public sector efficiency: Ring-fence essential healthcare and public transport services from austerity cuts. Introduce procurement and supply chain reforms in the health sector to reduce waste and ensure timely availability of essential medicines.

4. Good governance and public sector efficiency

No amount of resource allocation will succeed without institutional and governance reform to ensure that every rupee spent delivers maximum value.

4A. Fighting corruption and waste

The Budget should not merely fund Government, but reform it.

• Public procurement and asset management: Allocate resources for the immediate and full implementation of new Public Procurement and Public Asset Management Acts, ensuring transparent, competitive bidding and the monetisation or efficient use of under-utilised state assets.
• SOE reform fund: The Budget must clearly allocate projected proceeds from the State-Owned Enterprise (SOE) reform and restructuring program into a dedicated fund for debt reduction or high-priority public investment, not into discretionary expenditure.
• Transparency and accountability: Mandate the public release of key fiscal performance indicators and departmental expenditure reports every quarter, allowing for citizen oversight. Propose the establishment of an independent Tax Ombudsman to handle public complaints and ensure fairness in tax administration.

4B. Climate resilience and green economy

The long-term fiscal health of Sri Lanka is inseparable from its climate vulnerability.

nClimate-smart budgeting: Introduce a Green Budgeting framework that evaluates all major capital projects based on their climate resilience and environmental impact.

nRenewable energy investment: Provide the necessary legal and financial clarity, including through Public-Private Partnership (PPP) frameworks, to attract investment into renewable energy infrastructure, accelerating the shift away from costly and fiscally risky fossil fuels.

In conclusion, the Budget 2026 must be seen as a national covenant—a non-partisan, five-year commitment to structural transformation. The key elements proposed above are not a mere spending list. They are governance reforms dressed as budget proposals.

When evaluating the document in November 2025, the public and the markets must ask:

1. Does it deliver a credible, equity-focused path to a Tax-to-GDP ratio?

2. Does it genuinely simplify and de-bureaucratise the investment landscape to enable the private sector to lead growth?

3. Does it strategically re-allocate public funds to foster a future-fit, skilled human capital base?

4. Does it contain the legislative and funding mechanisms to enforce transparency, SOE reform, and end wasteful expenditure?

If the National Budget 2026 articulates, and robustly funds, these four pillars, we can hail it not just as a promising budget, but as the true turning point for Sri Lanka’s economic future. Anything less is a continuation of the high-risk political budgeting of the past. The time for tough, focused, and non-nonsense fiscal policy is now. Let us ignore the theatrics, cut the fluff, and find the heart of the Budget.

(The writer is currently, a Leadership Coach, Mentor and Consultant and boasts over 50+ years of experience in very senior positions in the corporate world – local and overseas. www.ronniepeiris.com.)