The Ministry of Finance also says that maintaining government revenue targets in the future may be a challenge due to the still unstable geopolitical situation in the Middle East, the decline in global trade and possible disruptions in the energy market.
Accordingly, a statement issued by the Ministry of Finance states that Sri Lanka’s total government revenue will decrease in 2026 compared to the level in 2025.
According to the data in the Fiscal Strategy Statement issued for the year 2027, total government revenue, including grants, was 16.7 percent of the gross domestic product in 2025, and the Ministry of Finance has predicted that it will decrease to 15.8 percent in 2026.
The reason for the increase in revenue in 2025 is the increase in tax revenue received with the resumption of vehicle imports that year. However, the decline in tax revenue relative to the decline in vehicle imports has been a major reason for the decline in state revenue.
The Ministry of Finance points out that state revenue had fallen to 8.4 percent of GDP during the 2022 economic crisis, which was among the lowest levels in the world. However, it states that the tax policy and revenue administration reforms implemented by the then government with the intervention of the International Monetary Fund have broadened the tax base and steps have been taken to minimize tax evasion and losses.