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Sri Lanka’s ambitious budget agenda faces high implementation risks: Fitch Ratings

Published

3 years ago

2023/11/23

The targets laid out in Sri Lanka’s budget for 2024 will be challenging to meet even with the economic recovery that we expect to continue next year, says Fitch Ratings.

The fiscal deficit is set to be wider than our current forecast of 7.1% of GDP in 2024 in light of the new data, even after excluding bank recapitalisation costs, and the revenue/GDP ratio will be lower than we had assumed, Fitch says.

The report further states:

“The government is targeting a budget deficit of 9.1% of GDP in 2024, wider than a revised estimate of 8.5% in 2023. However, without bank recapitalisation costs, the deficit in 2024 would be a narrower 7.6% of GDP. Excluding recapitalisation costs, the budget targets a primary surplus of 0.8% of GDP in 2024, against a deficit of 0.7% in 2023. However, including recapitalisation costs pushes the 2024 primary deficit target to 0.6% of GDP.”

“The primary surplus goal for 2024, excluding bank recapitalisation, is broadly in line with the 0.8% of GDP projected by the IMF in March when it approved Sri Lanka’s USD3 billion Extended Fund Facility (EFF). We also see the revenue target as relatively aligned. However, the government’s expenditure target for 2024, at 22.2% of GDP, is somewhat higher than the 19.7% the IMF had envisioned and well above the revised budget estimate of 18.7% for 2023.”

“The release of the next tranche of EFF financing, worth around USD330 million, will depend partly on the IMF’s assessment of Sri Lanka’s progress in securing financing assurances from official creditors. Fitch believes there has been some progress since March, but the timeline for a restructuring deal with official creditors remains unclear.”

“Fitch believes there are significant risks to the government’s revenue goal for 2024. Sri Lanka has a record of fiscal slippage, and revenue collection fell 29% short of target over 9M23. The authorities aim to raise revenue by almost 45% in 2024. This will be aided by a planned 3pp increase in the value-added tax to 18%, but the boost to revenue from inflation is set to weaken in 2024. We project consumer prices will rise by 8.7% on average in 2024, compared with 22.1% in 2023. The lift from economic growth, which Fitch projects at 3.3% in 2024, will also be modest.”

“Downside risks to revenue could be offset by lower-than-budgeted spending. We think the presidential election in late 2024 will incentivise the government to keep to its spending plans, which include a 14% increase in spending on salaries and wages. Nevertheless, if revenue falls short, there may be some room to trim capital expenditure, which amounts to almost 20% of total planned spending and is budgeted to rise 55% in 2024, excluding bank recapitalization.”

“The government’s efforts to implement governance reform after a recent diagnostic study by the IMF may also support revenue collection. The budget proposes to establish a new revenue authority under the Ministry of Finance to improve tax collection, and a new investment law will look to establish a National Economic Commission to promote investment. However, it will take time to assess these bodies’ effectiveness,” Fitch says.

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Related Topics:Fitch Ratings Sri Lanka budget for 2024

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SLEIS 2026 to examine Sri Lanka’s energy transition and its implications

Published

10 hours ago

2026/09/26

Thilina Walpola

Reliable and affordable energy is essential to Sri Lanka’s economic growth, industrial development and competitiveness. As the country seeks to strengthen energy security while reducing its dependence on fossil fuels, the energy sector will be a key area of discussion at the Sri Lanka Economic & Investment Summit 2026, organised by The Ceylon Chamber of Commerce on 12-13 October 2026.

The session, “Beyond Fossil Dependence: Balancing Security, Sustainability, and Growth,” will examine how Sri Lanka can diversify its energy sources, accelerate renewable energy adoption and attract investment while ensuring a reliable energy supply for businesses and households. Discussions will also consider the infrastructure and policy frameworks needed to support the country’s transition towards a modern and competitive energy system.

Ms. Edore Onomakpome – Regional Infrastructure Industry Manager – Bangladesh, Sri Lanka and Nepal, at the International Finance Corporation will keynote the session, and join the panel discussion featuring G.M.R.D. Aponsu – Secretary to the Ministry of Energy, Damitha Kumarasinghe – Director General (Chief Executive Officer), Public Utilities Commission of Sri Lanka, and Manjula Perera – Managing Director, WindForce PLC. The discussion will be moderated by Sheran Fernando – Senior Advisor, Plus94.

The session will also explore the role of public-private collaboration in developing new energy solutions, encouraging investment and creating opportunities within Sri Lanka’s evolving energy sector. It will consider how energy policy and investment decisions can support both economic expansion and the country’s longer-term sustainability objectives.

The Sri Lanka Economic & Investment Summit 2026 is supported by its valued sponsors and partners. Platinum Sponsor – Standard Chartered Bank Sri Lanka, Gold Sponsor – VISA Worldwide (Pvt) Ltd., Bronze Sponsor – South Asia Gateway Terminals (Pvt) Ltd., Strategic Development Partner – Asian Development Bank, Telecommunication Partner – Dialog Telecommunication, Television Partner – Dialog Television, Session Sponsors – David Pieris Motor Company (Pvt) Ltd., Hemas Holdings PLC, Sunshine Holdings PLC, International Construction Consortium (Pvt) Ltd., Official Logistics Partner – Hayleys Advantis Limited, Official Airline – SriLankan Airlines Ltd., Official Hospitality Partner – Shangri-La Colombo, Airline Partner – China Eastern Air Holding Co. Ltd.

Registrations are now open at https://sleis.chamber.lk/. For more information, contact Alikie on 011 558 8805 (alikie@chamber.lk) or Shanuka on 0701082541 (events.division@chamber.lk).

Business

A fresh chapter for the George Keyt Foundation: A renewed commitment to the Sri Lankan art ecosystem

Published

10 hours ago

2026/09/26

Thilina Walpola

The George Keyt Foundation (GKF), dedicated to preserving the legacy of modernist painter George Keyt and fostering local art, has announced strategic appointments to its leadership team, bringing together a mix of global academic expertise, corporate leadership, and artistic passion. These enhancements aim to inject fresh expertise and academic depth into the Foundation’s long-term vision.

Establishment of the New Advisory Committee

To broaden its operational reach and deepen its engagement with the global art market, the George Keyt Foundation has established an Advisory Committee. The newly appointed committee members include:

• Dr Sujatha Meegama is a Senior Lecturer in Buddhist Art History at the Courtauld. She is an acclaimed art historian, author and academic, bringing specialised knowledge in South Asian art history to guide the foundation’s curatorial and educational directives.

• Dr Shamil Wanigaratne: A clinical psychologist, author, and avid art historian, Shamil will lend his unique perspective to help the foundation design meaningful public outreach and cultural preservation strategies.

• Abbas Esufally: A veteran corporate leader and patron of the arts, Abbas is transitioning from his role as a GKF Trustee to this advisory position, where he will continue to offer his sharp business acumen and extensive network.

New Trustee Appointment

Leesha Captain has been appointed to the Board of Trustees. Inspired by Sri Lankan artists, Leesha is a recognised supporter of the local art scene. Leesha’s hands-on perspective will strengthen the foundation’s core team as they develop and design new art programs.

A Vision for the Future

“These new appointments mark an exciting chapter for us as we build on our decades-long history of promoting Sri Lankan artists,” says Malaka Talwatte, Chairman of the Foundation. “The combination of Leesha on the board, alongside the diverse expertise of our new Advisory Committee, will significantly amplify our efforts in curating high-profile exhibitions and expanding local and international partnerships”.

Business

Sun Siyam Pasikudah celebrates World Tourism Day with culture, cuisine and community

Published

10 hours ago

2026/09/26

Thilina Walpola

Sun Siyam Pasikudah, part of the Privé Collection under Maldivian-owned Sun Siyam Resorts, will mark World Tourism Day on 27 September 2026 with a full day programme celebrating the culture, cuisine and natural beauty of Sri Lanka’s east coast, paired with community focused sustainability activities.

The celebrations open with a special buffet of authentic Sri Lankan cuisine, followed by a street food festival showcasing regional snacks and traditional sweets rarely found on resort menus. A signature World Tourism Day mocktail and cocktail, created for the occasion, will be served through the day, while traditional Sri Lankan cultural dance performances bring the island’s heritage to life for guests.

Beyond the festivities, the resort has planned a tree planting activity with guests and a beach or park clean up campaign, both reflecting Sun Siyam Pasikudah’s ongoing commitment to responsible tourism along Sri Lanka’s northeast coast.