By The Pulseline News Desk
The Government has revised its procurement procedures for development projects to accelerate public investment and utilise the full Rs. 2 trillion capital expenditure allocation planned for next year.
The move follows years of persistent underutilisation of capital expenditure, with delays in project approvals, tender procedures and procurement processes preventing successive governments from fully implementing their planned development programmes.
Cabinet Spokesman, Minister Nalinda Jayatissa has said ministries had been instructed to begin preparatory work on next year’s projects without waiting for the 2027 Budget to be formally passed.
He has said the Government was seeking to move away from the practice of beginning project preparations only after the annual Budget was approved, a process that often delays the actual commencement of development activities by several months.
“If you plan to start in January, you will only be able to actually get it underway around May,” Jayatissa has told reporters.
He has explained that ministries already knew the development proposals they had submitted to the Finance Ministry and had an indication of the funding expected to be allocated to their respective projects.
Accordingly, ministries could begin preparing project plans and cost estimates and initiate procurement procedures even before the Budget was passed. “They can carry out the procurement activities and wait until the Budget is passed only to award the contract,” he has said.
Jayatissa has said the Government had approved this approach across all ministries, enabling contracts to be awarded from the first week of January once the Budget allocations were formally confirmed.
He has said the 2027 Budget was expected to be passed on December 14, after which the Speaker’s endorsement would allow ministries to establish their final allocations and proceed with contract awards.
Utilizing capital expenditure
The Government expects this revised approach to help utilise the planned Rs. 2 trillion capital expenditure allocation next year.
However, Jayatissa has acknowledged that achieving full utilisation of capital expenditure in the current year would be difficult because of technical difficulties and delays in tendering and procurement.
Finance Ministry officials have indicated that the Government had spent less than 25% of the Rs. 1.34 trillion capital expenditure allocation during the first nine months of this year.
The persistent gap between budgeted and actual capital spending has been a longstanding problem in Sri Lanka’s public financial management system.
Successive administrations have struggled to translate budgetary allocations into completed development projects, with much of the expenditure traditionally concentrated in the final quarter of the financial year.
Undermining growth
Analysts and economists have repeatedly warned that the failure to implement planned capital investments could undermine economic growth and delay the structural improvements needed to strengthen the country’s productive capacity.
Capital expenditure is essential for developing transport infrastructure, modernising electricity networks, expanding digital public services and addressing other infrastructure constraints that affect business competitiveness and productivity.
When allocated funds remain unspent, the economy loses the potential benefits of those investments, including improved infrastructure, employment generation, private-sector activity and higher long-term productivity.
The problem also raises questions about the Government’s capacity to implement large-scale development programmes and effectively utilise financing made available through the national budget and international development partners.
Sri Lanka’s fiscal constraints make efficient capital expenditure particularly important. With the country continuing its post-default economic recovery and operating under significant debt-servicing and fiscal pressures, the quality and execution of public investment will be critical to sustaining economic growth.
President Anura Kumara Dissanayake had previously indicated that the Government intended to change the existing procedures to accelerate capital expenditure implementation, acknowledging that the traditional system had contributed to delays.
The latest decision represents an attempt to address one of the structural weaknesses in public investment management by allowing ministries to undertake preparatory and procurement work ahead of formal budget approval.
Whether the revised process will translate into higher actual expenditure, however, will depend on the ability of ministries to prepare viable projects, complete procurement procedures transparently and resolve technical and administrative obstacles without compromising accountability.
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