Sri Lanka plans to cut recurrent spending, boost development expenditure in 2027

Economic plans for the coming year focus on reducing recurrent expenditure, currently at 9 percent, while increasing capital expenditure, now at 4 percent, President Anura Kumara Dissanayake said on Tuesday (28) at a special coordination committee meeting in southern Sri Lanka’s Galle district.

The government plans to allocate 2 trillion Sri Lankan rupees for capital expenditure in 2027, representing an increase of about 40 percent, Dissanayake said.

He said the government could not justify allocating a larger share of public resources to maintaining state operations and should instead direct more funds toward investment and development.

Every rupee received by the Treasury should contribute to the country’s development, the president said, adding that the government aimed to strengthen financial discipline and prevent future generations from carrying an excessive debt burden.

The meeting reviewed development projects implemented under the 2026 budget, the Galle District Development Plan and the district’s funding requirements for 2027.

Dissanayake said the upcoming budget would prioritize the digitalization of government services to improve public-sector efficiency and allow citizens to obtain services from their homes.

The government is also considering extending the retirement age in selected fields to retain experienced and skilled professionals in the public service.

The president said successive efforts to use the public sector primarily as a source of employment had weakened state institutions and produced adverse economic consequences. He called for an outward-oriented economy capable of generating more employment opportunities, particularly for young people.

Officials told the meeting that provincial council projects in the district had achieved about 90 percent physical progress. Authorities have also approved 122 rural road projects with an allocation of 250 million rupees, completing work on 57 of them.

The meeting reviewed projects under the Prajashakthi program, which targets multidimensional poverty through measures covering production, food security, human resource development, market access and social protection.

Officials also discussed the Galle City Development Plan, including proposals to develop Galle Fort as a tourism zone, transform Galle into an economic hub and establish an administrative zone in Mahamodara.

The president instructed state institutions to resolve disputes delaying projects and implement development work under a unified national plan, according to the President’s Media Division.