Government begins 2027 Budget preparations

The Government has begun preparations for the 2027 Budget with tighter expenditure controls, requiring ministries to operate within fixed spending ceilings while subjecting all new spending proposals to a stricter public investment approval process.

According to the 2027 Budget Call issued under National Budget Circular 02/2026, the Government will continue its fiscal consolidation programme by limiting recurrent and ongoing expenditure to pre-approved baseline allocations, with new initiatives to be considered separately based on available fiscal space.

The Government is targeting a primary surplus of 2.6 per cent of GDP in 2027, up from 2.1 per cent in 2026, while aiming to reduce the overall Budget deficit to 4.5 per cent of GDP from 5.6 per cent this year.

Under the expenditure ceilings, the Ministry of Public Administration, Provincial Councils and Local Government has received the largest baseline allocation of Rs. 722 billion, followed by Provincial Councils with Rs. 655 billion. The Ministry of Health and Mass Media has been allocated Rs. 595 billion, the Ministry of Transport, Highways and Urban Development Rs. 491 billion, the Ministry of Finance, Planning and Economic Development Rs. 458.1 billion and the Ministry of Defence Rs. 447 billion.

The Treasury said ministries must accommodate all ongoing commitments within these ceilings, while new development projects and policy initiatives will be assessed separately by the Public Investment Committee based on national priorities, implementation readiness, affordability and expected economic and social benefits.

The circular also instructs ministries to prioritise projects nearing completion, improve efficiency, identify cost savings and ensure adequate funding for statutory obligations such as salaries, pensions, utilities and contractual commitments. Budget estimates must be submitted through the Integrated Treasury Management Information System (ITMIS), with all ministries and state institutions required to forward their 2027 estimates to the Department of National Budget by July 31.