Sri Lanka’s 2026 national budget was approved by the Parliament on 5 December 2025, after completion of the third reading of the Appropriation Bill. In the approved estimates for the financial year 2026 (April 2026 to March 2027), total government expenditure is projected at SLRs8.9tn ($30bn) for 2026, marking an increase of 1.6% as compared to the 2025 budget. Of the total, recurrent expenditure is estimated at SLRs5.7tn ($19.1bn) and capital expenditure at SLRs3.3tn ($10.9bn); the 2026 budget estimates a revenue of SLRs5.4tn ($17.9bn), marking an increase of 4%, as compared to the 2025 budget. As part of the latest budget, the government plans to increase capital expenditure on infrastructure like expressways and electricity grid upgrades, stimulate private investment and attract foreign direct investment, including reforms for investor protection and public-private partnerships.
Some of the major allocations are SLRs2.9tn ($9.8bn) for the Ministry of Finance, Planning, and Economic Development, SLRs635bn ($2.1bn) for the Ministry of Public Administration, Provincial Councils and Local Government, SLRs450bn ($1.5bn) for the Ministry of Health and Mass Media, SLRs370.5bn ($1.2bn) for the Ministry of Defence, SLRs233.9bn ($780.1m) for Ministry of Education, Higher Education and Vocational Education, SLRs72.4bn ($241.4m) for the Ministry of Housing, Construction and Water Supply, SLRs58.5bn ($195.2m) for Ministry of Transport, Highways and Urban Development, SLRs27.5bn ($91.7m) for the Ministry of Rural Development, Social Security and Community Empowerment, and Ministry of Energy received a total allocation of SLRs22.4bn ($74.6m).
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The government also allocated funding for several projects:
- SLRs8bn ($26.7m) for the Rural Infrastructure Development Project in Emerging Regions
- SLRs5.7bn ($19m) for the Greater Colombo Water and Wastewater Management Improvement Programme
- SLRs2.2bn ($6.6m) for the Infrastructure Development in the Estate Sector
- SLRs1.4bn ($4.6m) for the Construction of the Gandara Fishery Habour
- SLRs1bn ($3.3m) for the Greater Colombo Wastewater Management Project
Sri Lanka’s President Anura Kumara Dissanayake has announced that the government will seek a supplementary budget of SLRs500bn ($1.7bn) from parliament to fund extra Cyclone Ditwah-linked spending in 2026, on top of the SLRs72bn ($240.2m) already planned for Ditwah relief and recovery in 2025 and a SLRs50bn ($166.8m) supplementary allocation for 2025, reflecting the government’s stepped-up fiscal response to the devastating storm. Under the plan discussed in the special budget session, those affected by landslides and flooding may be given SLRs5m ($167,000) each for relocation or land purchase and another SLRs5m ($167,000) to rebuild destroyed homes, while compensation will also extend to businesses and farmers.
Sri Lanka’s 2026 budget supports the construction industry by prioritising large public investments in infrastructure such as roads, highways, urban development, housing, water supply, and irrigation projects. Increased government capital expenditure is aimed at reviving stalled projects, improving connectivity, and generating employment. The budget also focuses on encouraging private sector participation, supporting small and medium-sized contractors through better financing access, and attracting foreign investment. Together, these measures are intended to stimulate construction activity, strengthen industry confidence, and support overall economic recovery in 2026.
In early January 2026, Sri Lanka’s Central Bank released an upbeat assessment of the economy for 2026, forecasting that growth will remain around 4%-5% in 2026, supported by both private and increased public spending, continuing the momentum from the past two years. The Central Bank also highlighted stronger fiscal, external, and monetary buffers that should help the economy bounce back faster from shocks, while also outlining key policy measures for 2026, including adjustments to bank reserve requirements, improving foreign exchange transparency, strengthening financial sector resilience, and reviewing the inflation target arrangement with the government. Additionally, the Central Bank has scheduled six monetary policy meetings in 2026, starting this month, to guide economic management throughout the year.
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By GlobalDataAccording to GlobalData, the construction industry is expected to record an annual growth rate of 5.8% in 2026, before registering an annual average growth of 5% from 2027 to 2029, supported by public and private investments in infrastructure and energy construction projects. In early January 2026, the Sri Lankan Government announced that it targets three million tourist arrivals in 2026, a 27% increase from the record 2.36m in 2025, to boost revenues from its second-largest foreign exchange earner, which generated SLRs1tn ($3.2bn) in 2025. The nation also eyes SLRs149.9bn ($500m) in tourism investments in 2026, up from SLRs98.6bn ($329m) across 126 projects in 2025. Furthermore, in early December 2025, the Sri Lankan Government announced that it plans to invest SLRs659.5bn ($2.2bn) in infrastructure development for 2026, prioritising transport corridors and reviving stalled road projects. The Transport, Roads and Highways Ministry will allocate SLRs329.7bn ($1.1bn) for nationwide road projects, including SLRs64.5bn ($215m) specifically for the Central Expressway section between Kadawatha and Mirigama. Additional efforts include a feasibility study for an elevated highway linking to Marine Drive in Colombo, alongside improvements and widening of urban roads.
