Anura Kumara Dissanayake’s 2026 budget betrays election promises, imposing brutal IMF-mandated austerity on Sri Lanka’s poor while shielding corporations and escalating a debt trap that bleeds the nation dry.
Sri Lankan President Anura Kumara Dissara Dissanayake’s 2026 budget, presented to Parliament on November 7, marks a further escalation of the systematic assault on the living conditions of workers and the poor, while simultaneously granting unprecedented concessions to big business and international finance. This budget, Dissanayake’s second since his Janatha Vimukthi Peramuna led National People’s Power coalition secured parliamentary power a year ago, definitively exposes the government’s true role as a faithful enforcer for the International Monetary Fund and the corporate elite. The document, a blueprint for deepened austerity, is sold to the public as essential fiscal reform but in reality it tightens the chains of a vicious foreign debt cycle, systematically strips the poor of social relief, and rewards corporate interests, turning a party with once radical pretensions into the IMF’s most disciplined local administrator.
Dissanayake, who also holds the finance portfolio, began his budget speech with the hollow claim that his administration was on a continuous mission to deliver grassroots economic benefits. This rhetoric stands in stark contrast to the budget’s actual content. Every major policy directive, from the structure of taxation and investment policy to the radical restructuring of the public sector, strictly adheres to the dictates of the International Monetary Fund. The IMF’s direct influence was made explicit just weeks before the budget. On October 9, IMF mission chief for Sri Lanka Evan Papageorgiou stated in Colombo that the IMF would meticulously monitor both the size and quality of government spending. He confirmed that a staff level agreement for a $347 million loan tranche was contingent solely on Parliament passing a 2026 budget that was fully in line with the IMF program parameters. This external pressure underscores that the Dissanayake administration is governing not for its people, but for its international creditors.
The president’s tone during his marathon budget reading was notably threatening towards the populace. He explicitly warned public employees not to ask for more and told the unemployed to cease street protests. He menacingly advised the poor who depend on welfare benefits that state assistance would now be strictly limited to what the government deems genuine cases. The 2026 budget projects a massive deficit of approximately 3.7 trillion rupees, equivalent to about $12 billion. This shortfall is to be met entirely through fresh domestic and foreign borrowing, a move that perpetuates Sri Lanka’s destructive sovereign debt trap and ensures future generations will inherit an even greater burden. Total government expenditure for 2026 is estimated at nearly 9 trillion rupees, while revenue is projected at a much lower 5.3 trillion rupees.
The government plans to bridge this gap by raising five trillion rupees in revenue, a target it intends to meet primarily through regressive indirect taxation and deep cuts to social spending. Dissanayake boasted that tax revenue for this year was projected to rise by a staggering 1.2 trillion rupees compared to 2024. Crucially, roughly 75 percent of this increase is being collected from value added tax and other indirect taxes that disproportionately impact ordinary consumers and the working poor. The destination for all this revenue extracted from the masses is clear. The budget allocates a colossal 4.5 trillion rupees for debt servicing, a figure that dwarfs all other expenditures. Dissanayake informed Parliament that for 2025, the amount scheduled for foreign debt repayment is $2,435 million, a sharp increase from the $1,674 million paid in 2024. This comes despite the country having declared a default on its foreign debts during the unprecedented economic crisis of 2022 and the subsequent IMF bailout loan in 2023 which promised a deferral of debt servicing until 2028.
The budget introduces several measures that will directly increase the cost of living for ordinary Sri Lankans. The general import duty ceiling will be raised from 20 percent to 30 percent, which will inflate the prices of essential items like electronic goods, plastics, and textiles. Meanwhile, the VAT threshold will now apply to businesses with a monthly turnover as low as five million rupees. This change drags thousands of small traders into the tax net, a move that will inevitably be passed on to consumers through higher prices on nearly all goods and services, including fuel, utilities, and food. A major component of the IMF driven economic reform program is the drastic reduction of public expenditure. Dissanayake reiterated the government’s plan to shut down 35 state institutions entirely, while another 57 will be merged, restructured, or liquidated. The overarching plan involves the restructuring of about 400 state enterprises, a move that threatens thousands of jobs and vital public services.
New legislation such as the Public Commercial Business Management Act and the Public Private Partnerships Bill are being introduced to accelerate the privatization and commercialization of state assets. Furthermore, a new Investment Protection Act is slated for early 2026, designed to guarantee the ease of doing business for foreign and domestic capital. A Public Assets Management Bill will create a centralized digital database for state lands, explicitly intended to facilitate their commercial exploitation by big business. These moves, combined with the establishment of technology parks, investor visa schemes, and single window systems to bypass environmental and social regulations, reveal a clear and aggressive drive toward unfettered capital exploitation. As with previous capitalist administrations, the Dissanayake government has carefully avoided imposing any wealth or capital gains taxes and left corporate tax rates untouched. This strategic choice protects the business elites and corporate profits while placing the entire tax burden squarely on the working masses.
Unsurprisingly, the big business community has lavished praise on this budget. The chairman of the powerful Ceylon Chamber of Commerce, Krish Balendra, commended the government for its fiscal discipline. The president’s own economic advisor and a former CCC chairman, Duminda Hulangamuwa, stated that the government had correctly restored the private sector as the engine of growth. He noted that almost every major reference in the budget, from tax incentives to institutional reforms, was directed toward encouraging private sector participation. The government is simultaneously imposing deep cuts to welfare and social services. Dissanayake announced that the Aswesuma relief program, a meager aid scheme for the poorest families, will be reformed to target only genuine low income earners, a phrase that directly echoes the language used by IMF and World Bank officials.
Displaying the government’s contemptuous attitude toward the poor, JVP leader and Industry Minister Sunil Handunnetti publicly stated a day before the budget that society should be ashamed of receiving Aswesuma, comparing it to legally begging. He made this sinister statement against a backdrop of devastating poverty. The World Bank estimates that 22 percent of Sri Lankans now live below the poverty line, with another 10 percent hovering just above it. Over half the population faces some level of food insecurity. The economic collapse has been brutal on wages; since 2022, real wages have fallen by 24 percent in the public sector and 14 percent in the private sector. The World Bank further estimates that due to austerity measures in the last two years alone, 3.9 percent of the population has been pushed into poverty.
The budget offers only token gestures to placate public anger. University students’ stipends were increased to a paltry 10,000 rupees per month, far short of their demand for 15,000 rupees. Allocations for the crumbling public education and health sectors saw only modest increases, insufficient to address the severe crises they face. For plantation workers, Dissanayake announced a daily wage increase of 400 rupees, with the state subsidizing half of this paltry sum on behalf of the wealthy plantation companies. It remains doubtful whether even this negligible increase will be fully implemented. The president announced plans to recruit 75,000 new public servants, primarily in law enforcement, revenue collection, and technical sectors. However, he used this announcement to warn protesting unemployed youth to halt their actions and go home to study for recruitment exams, revealing a dismissive attitude toward legitimate grievances.
His budget speech revealed open contempt for public anger over economic hardship. He announced a meager second phase monthly wage rise for the public sector, amounting to just 2,750 rupees, an amount that is insufficient to cover even two days of basic expenses for a family. The JVP NPP leader then directly threatened public sector employees, telling them not to ask for more allowances because the government has no funds. He ordered them to go home instead of standing on the streets, asserting that protests are futile as the current policy is non negotiable. Dissanayake’s threats to public employees, the unemployed, and welfare recipients make it clear that the JVP NPP government will ruthlessly implement the IMF program while brutally suppressing any and all opposition.
The government has already demonstrated its willingness to use force. In August, the military was deployed to suppress a strike by postal workers. In September, the President invoked the Essential Public Services Act to threaten workers who were opposing the privatization of the Ceylon Electricity Board. The parliamentary opposition, including parties like the Samagi Jana Balawegaya and the Sri Lanka Podujana Peramuna, offered only token criticisms of the budget, as they all fundamentally support the IMF program and its austerity framework. The trade union bureaucracies, including those affiliated with the JVP, have deliberately worked to suppress workers’ actions and channel discontent into harmless parliamentary channels.
However, beneath the surface of enforced calm, public anger is simmering and beginning to boil over. On November 10, farmers across multiple regions denounced the budget for providing no relief for their dire situation and vowed to continue their protests. Retired teachers also demonstrated on budget day over their unmet demands. Sri Lanka’s situation is not isolated. Amid a deepening global capitalist crisis, the IMF has intervened in numerous countries over the past decade to defend the interests of international creditors. In recent months, general strikes and massive youth protests have erupted against brutal IMF austerity programs in countries like Kenya, Zimbabwe, and Pakistan, showing a global pattern of resistance.
To defeat the IMF austerity program being implemented by the Dissanayake government, workers and the poor in Sri Lanka must break from all capitalist parties. They need to mobilize their independent political and industrial strength by forming independent action committees in workplaces, neighborhoods, and rural areas, free from the control of union bureaucrats and political parties that serve the ruling class. The crucial task is for Sri Lankan workers to unite with workers internationally, including those in advanced countries, who are also fighting against austerity measures, wage cuts, job losses, and social inequality. The strategic aim of this struggle must be to establish a workers’ and peasants’ government, advancing a socialist and internationalist program. This program would include the repudiation of the illegitimate foreign debt and the placing of key industries, banks, and corporations under collective public ownership, reorienting the economy to serve the social needs of the vast majority, not the profits of a few.
