Reading the 2026 Budget Through a National Performance Framework
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The presentation of the 2026 Budget by Hon. President Anura Kumara Dissanayake last week has sparked wide discussion across the country. Economists, business leaders, academics, and civil society voices have all offered their own interpretations—some grounded in technical expertise, others shaped by social realities or political ideology. Yet beneath these varied viewpoints lies a nation still grappling with a deep economic crisis, where many of the daily hardships faced by people are only surface-level symptoms of a much larger structural problem. At this moment, what Sri Lanka needs most is a clear, balanced, and properly informed analysis of the Budget.
This Budget is unique for several reasons. To understand it properly, we must “read” it through the lens of Sri Lanka’s current economic realities as well as the fiscal consolidation pathway outlined under the International Monetary Fund (IMF) programme. Some argue that this Budget reflects a liberal policy orientation, citing several key allocations that support this view: strong investment in human capital, an infrastructure-led growth strategy, targeted support for private enterprise and MSMEs, and an emphasis on fiscal discipline and transparency.
Anyway, it can be argued that it is still too early to categorize the 2026 budget as a fully liberal budget approach, especially when considering the structural realities that continue to shape Sri Lanka’s economy. Still the some sectors in Sri Lanka restricted private-sector space, with state dominance. And also, we can witness a weak performance-based management system with no strong KPI-linked monitoring or institutional performance cells. Moreover, the country still maintains a broad subsidy orientation, where extensive welfare transfers may constrain productivity unless they shift toward targeted and time-bound mechanisms. Even though we can see improved tax administration in the recent past, there is a need to have proper tax rationalization, requiring significant simplification to become broad-based and globally competitive. These factors collectively indicate that, despite certain reform signals, it may be premature to label the 2026 budget as fully liberal in nature.
Overall, Sri Lanka needs to have proper monitoring mechanisms for the budget. Even if it is a liberal type, development, or any type of budget, we need to see how we can have a budget monitoring system.
Establish a National Budget Performance and Evaluation Office
Whatever the budgets presented last seven decades, the implementation of budget proposals can always be mostly considered as around 30-50 %. Sri Lanka needs to have proper budget monitoring mechanisms. This is not only important for the budget but also for all other activities in Sri Lanka. Most of the countries in the world have this, and we can learn many best practices from them.
Establishing a National Budget Performance and Evaluation Office is essential for strengthening Sri Lanka’s fiscal governance and ensuring that public spending delivers measurable value. Such an office would provide an independent, data-driven mechanism to track budget implementation, monitor programme outcomes, and evaluate whether ministries achieve their intended results. Drawing from global best practices—including India’s PFMS-enabled monitoring and OECD program-based budgeting frameworks—the office would develop clear KPIs, performance scorecards, and annual evaluation reports linked to national priorities. By integrating financial data, output metrics, and policy outcomes, this institution would enable evidence-based decision-making, improve budget credibility, reduce wastage, and foster greater transparency and accountability across the public sector. Ultimately, this would help shift Sri Lanka’s budgeting process from input-focused allocations toward performance-oriented results.
Conclusion
There is an urgent need for a paradigm shift in Sri Lanka’s economy, where export diversification, strengthened governance, and institutional efficiency become essential pillars of reform. Establishing a National Budget Performance and Evaluation Office is a critical step that can help the country address many long-standing challenges related to governance, fiscal discipline, and evidence-based decision-making. Such an institution would create the mechanisms required for transparency, accountability, and performance-focused budgeting. Ultimately, for Sri Lanka to gain greater global recognition and move toward a more stable, credible economic future, every stakeholder must be equipped with the right knowledge, tools, and systems that support disciplined financial management and a respected national identity.
Professor Nalin Abeysekera
(The writer is a Professor in Management Studies, Open University of Sri Lanka and you can reach Professor Abeysekera at nabey@ou.ac.lk)
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