SL Government Lowers 2025 Budget Deficit to 6.5% Amid Spending Cuts
- CNL Reporter
- July 2, 2025
- Business News, News
- SL Government
- 0 Comments
Sri Lanka has revised its projected budget deficit for 2025 from 6.7% to 6.5% of GDP, citing slightly lower interest payments and slower-than-expected capital expenditure, according to the latest Fiscal Strategy Statement.
While revenue is expected to remain on target at 15.1% of GDP, current spending will edge up by 0.1%, and interest costs will decline by the same margin. Capital expenditure and net lending are now estimated at 3.7% of GDP—below the earlier forecast of 4%, but higher than 2024’s 2.7%.
Deputy Economic Development Minister Anil Jayantha attributed the slowdown in capital outlays to delays but assured that spending would be ramped up gradually. In 2023, only 65% of planned capital spending was utilized.
Lower government borrowing has helped reduce interest rates and stabilize inflation, driving a 4.8% GDP growth in Q1 2025, largely powered by private sector activity. This mirrors the post-2001 recovery when fiscal restraint led to strong economic gains.
The government remains committed to its debt reduction targets, aiming to keep primary expenditure below 13% of GDP, as legislated. Capital spending is projected to rise to 4.3% of GDP by 2030, aligning with long-term infrastructure and investment goals.
