Sri Lankan President Anura Kumara Dissanayake unveiled the country’s 2027 national budget on Thursday, setting an ambitious target of 7% sustained economic growth while outlining major investments in renewable energy, infrastructure, trade and emerging technologies.
Presenting the budget in Parliament, Dissanayake announced total government expenditure of 9.92 trillion Sri Lankan rupees (approximately $31.8 billion), with around 2 trillion rupees allocated for capital investment, according to local media outlet Newswire.
The budget reflects the government’s efforts to accelerate economic recovery, strengthen public infrastructure and attract investment as Sri Lanka continues to navigate the aftermath of its unprecedented financial crisis in 2022.
Energy development emerged as one of the central priorities of the spending plan, with the government announcing a 500-megawatt floating solar power programme and a 30-megawatt battery energy storage system. The government has also allocated 26.5 billion rupees to strengthen and modernise the country’s national electricity grid.
As part of efforts to encourage renewable energy adoption among households, the government announced financial subsidies for eligible rooftop solar installations equipped with battery storage systems.
Under the programme, households will receive subsidies of 25,000 rupees per kilowatt of installed capacity, subject to a maximum payment of 250,000 rupees per household.
The initiative is intended to expand decentralised electricity generation, reduce pressure on the national power network and improve energy security. The proposed floating solar programme is also expected to diversify Sri Lanka’s renewable energy portfolio and reduce dependence on conventional power sources.
Beyond energy, the government is seeking to strengthen Sri Lanka’s position in regional and international trade through new economic partnerships.
Dissanayake announced plans to explore a free trade agreement with China while pursuing an expansion of the existing trade agreement with neighbouring India.
The proposed initiatives are aimed at widening market access, encouraging foreign investment and creating new opportunities for Sri Lankan exporters. China and India are among Sri Lanka’s most important economic partners, particularly in trade, infrastructure development and investment.
The budget also places emphasis on technological development, with the president announcing plans to establish an artificial intelligence excellence centre. The initiative is expected to support the development and adoption of AI technologies, strengthen technical expertise and promote innovation across different sectors of the economy.
The proposed investments come as Sri Lanka attempts to consolidate its economic recovery following the severe financial collapse of 2022, which marked the country’s worst economic crisis in decades.
The crisis was triggered by a combination of mounting external debt, declining foreign currency reserves, policy failures and economic disruptions. Sri Lanka defaulted on its foreign debt obligations in 2022 and experienced severe shortages of essential commodities, including fuel, food and medicines.
The economic breakdown sparked widespread public demonstrations, known as the Aragalaya movement, which eventually forced then-President Gotabaya Rajapaksa to leave the country and resign from office.
In response to the crisis, Sri Lanka secured a $3 billion bailout programme from the International Monetary Fund in 2023. The programme introduced economic reforms focused on restoring fiscal stability, restructuring debt, improving government revenue and rebuilding foreign currency reserves.
The current administration is continuing to work within the IMF-supported recovery framework while attempting to revive economic activity and improve living standards.
The government is now seeking an additional $345 million under the IMF programme, subject to approval. The funding is expected to support the country’s ongoing economic stabilisation efforts and help maintain progress under the agreed reform framework.
However, economic pressures remain significant, particularly for households still struggling with the rising cost of living.
Inflation reached 8.3% in October, highlighting continuing price pressures and the challenges facing the government as it seeks to balance economic growth with household affordability.
The 2027 budget is therefore being presented at a critical stage in Sri Lanka’s recovery, with the government attempting to combine fiscal discipline and international financial commitments with increased investment in infrastructure, renewable energy and economic development.
Parliamentary debate on the proposed budget is scheduled to begin on Friday. Lawmakers will examine the government’s spending priorities, revenue plans and proposed economic measures before the final vote, which is scheduled for December 14.
