Thursday’s Budget: The Tests the Government Has Set for Itself

President Anura Kumara Dissanayake, who is also Minister of Finance, is due to present the 2027 Budget to Parliament on Thursday 12 November, according to The Sunday Times and Newswire. It will be the third budget of the National People’s Power government, and the first presented after the government reached a new staff-level agreement with the International Monetary Fund.

In the past fortnight, the President and senior officials have set out a series of expectations in public. Taken together, they amount to an ambitious promise: lower taxes for salaried workers, the final stage of a large public sector pay rise, a welfare budget of more than a trillion rupees, continued fuel subsidies, and all of it without missing revenue targets. Lanka Witness sets out those promises here so that readers can measure Thursday’s speech against them.

Test one: tax relief for salaried workers

Speaking at the National Trade Union Convention in Colombo on 7 November, the President said the government expected to raise the PAYE income tax threshold again in the 2027 Budget, the Daily Mirror reported. He noted that the threshold had already been raised from Rs. 100,000 to Rs. 150,000 a month, and said that higher salaries alone were not enough to relieve employees. At a separate public meeting, he said the government would cut some taxes without upsetting revenue targets, and that no new taxes had been imposed since it took office, according to The Sunday Times of 1 November.

This is a clear and checkable commitment. The test is not only whether the threshold rises, but by how much, and whether the relief reaches lower and middle-income earners rather than mainly those at the top. An analysis published in Colombo Telegraph on 27 September by Dr Piyadasa Edirisuriya, a former Finance Ministry official, suggested an illustrative package of about Rs. 135 billion in tax relief, including lower personal income tax bands, funded by roughly Rs. 145 billion in better compliance and fewer exemptions. The author stressed these were illustrative figures, not Treasury costings. They show that relief is possible, but only if the revenue measures behind it are real.

Test two: public sector pay and pensions

According to The Sunday Times, a senior government official said public sector salaries would rise by about Rs. 20,000 in the lowest grades and up to Rs. 80,000 in higher grades, as the final stage of a three-phase increase that began in 2025. The newspaper reported an allocation of Rs. 330 billion for this final instalment, and said pension allocations would total about Rs. 500 billion, with 720,000 new pensioners added since last year.

This matters because public sector unions are already in dispute with the government. Development Officers began an islandwide sick-leave campaign on 9 November, and government doctors have staged protests. If the final pay increment is delivered in full and on time, it will answer some of those complaints. If it is delayed or reduced, the government will face more disruption to public services in the new year.

Test three: welfare that reaches the right people

The Sunday Times reported that the welfare budget would top Rs. 1.2 trillion, including about Rs. 240 billion for the Aswesuma cash transfer scheme, support for elders and people with disabilities, the fertiliser subsidy and Mahapola student aid. That is a large sum, and the government deserves credit for protecting social spending under an IMF programme.

But the size of an allocation is not the same as its effect. Opposition Leader Sajith Premadasa told Parliament on 4 November that the Aswesuma data was flawed and claimed that poverty stood between 30 and 40 percent, noting that the Household Income and Expenditure Survey had not been completed, according to Newswire. Those are opposition claims, and Lanka Witness reports them as such. They point to a real gap: without up-to-date survey data, neither the government nor its critics can show with confidence how many families are poor, or whether Aswesuma is reaching them.

Test four: fuel and electricity

The NPP promised during its election campaign to reduce electricity bills and to price fuel closer to its import cost. Premadasa told Parliament on 4 November that the government was preparing to raise electricity tariffs again after fuel price increases, despite its pledge to cut bills by a third, Newswire reported. The Sunday Times reported that the fuel subsidy is likely to continue, with Rs. 150 billion spent this year and a similar or larger amount expected next year.

On 10 November, The Morning reported that Parliament’s Committee on Public Finance, chaired by Opposition MP Dr Harsha de Silva, called for an independent regulator for fuel pricing and fair competition. The committee noted significant differences between the Ceylon Petroleum Corporation’s landing costs and those of other suppliers, and called for a move away from blanket subsidies towards targeted support for vulnerable groups and public transport. If the Budget sets out a credible plan for transparent fuel pricing, that will be a real reform. If it simply renews a blanket subsidy, the costs will keep landing on the Treasury without any clear benefit to the poorest households.

Test five: will this year’s promises be delivered?

Budget speeches in Sri Lanka have a long history of announcements that never happen. Verité Research, an independent Colombo think tank, publishes an annual State of the Budget review and has run a public Budget Proposals Hub ahead of the 2027 Budget, according to its website and the Daily Mirror. The Daily Mirror noted that Sri Lanka scored 9 out of 100 on public participation in the Open Budget Survey 2025.

That score is a reminder that the budget process is still largely closed. A government that promised transparency should publish, alongside Thursday’s speech, a clear table of each major proposal, its cost, the ministry responsible and the date by which it should be delivered, and report against that table every quarter. That would allow citizens, Parliament and independent groups to see what is delivered and what is quietly dropped.

What to watch on Thursday

Readers should look for five things: the new PAYE threshold and income tax bands; the date and size of the final public sector pay increment; whether Aswesuma eligibility will be updated with fresh survey data; whether the fuel subsidy is targeted or blanket, and whether an independent fuel price regulator is created; and whether the government publishes an implementation timetable for its own proposals. Lanka Witness will report on each of these after the speech.