By The Pulseline News Desk
Sri Lanka has spent only around Rs. 385 billion of its record Rs. 1.38 trillion capital expenditure allocation this year, prompting renewed scrutiny of procurement bottlenecks and delays in implementing public investment projects.
The slow pace of spending has brought the country’s public procurement framework under the spotlight, with Parliament’s Committee on Public Finance (COPF) this week reviewing progress on drafting a new Procurement Act and measures to make government purchasing more efficient, transparent and systematic.
The committee has examined shortcomings in existing procurement procedures, including delays in purchasing essential goods, deficiencies in the legal framework, registration-related problems and operational difficulties associated with digital procurement systems, Parliament has said in a statement.
The discussions come as the Government faces mounting pressure to accelerate capital spending and ensure that budgetary allocations translate into infrastructure development and stronger economic growth.
Capital expenditure is critical to improving transport networks, strengthening the electricity grid, modernising public services and addressing structural constraints that undermine productivity.
Procurement delays hamper public investment
During the COPF discussions, particular attention was given to the need to reduce delays in procuring pharmaceuticals and other essential goods.
Proposals to accelerate procurement included raising the financial thresholds applicable to procurement committees, introducing long-term framework agreements for repetitive purchases and developing procurement guidelines tailored to specific sectors.
Such measures are intended to reduce procedural delays while improving the Government’s ability to purchase goods and services in a timely and cost-effective manner.
The committee has also assessed the implementation of the Procurement Management Information System (PROMIS), a digital platform designed to improve the management and monitoring of public procurement.
According to Parliament, PROMIS is currently being used to monitor procurement procedures across 394 active procurement units covering 19 ministries.
Plans are reportedly underway to expand the system to all provincial councils and government departments by 2027, potentially improving oversight and accountability across the public sector.
However, the broader challenge extends beyond digitising procurement. The effectiveness of the reforms will depend on whether the Government can address the regulatory, administrative and institutional obstacles that continue to delay project implementation.
President acknowledges restrictive procurement system
President Anura Kumara Dissanayake has acknowledged the problem recently, telling an investor forum that Sri Lanka’s existing procurement system had been built around the assumption that the state apparatus was vulnerable to corruption.
He has said successive governments had introduced successive layers of regulations, eventually creating a system so restrictive that the implementation of projects had become difficult.
The President has pledged to develop modern procurement systems, stressing the need for more flexible mechanisms that could facilitate public investment without compromising transparency and accountability.
His remarks signal a recognition within the Government that excessive procedural requirements may be undermining its ability to execute capital projects, even when funding has been allocated.
The challenge will be to simplify the process without weakening safeguards against corruption, favouritism and the misuse of public funds.
A revised Procurement Act could provide the legal foundation for such changes, although its impact will depend on the scope of the reforms and how effectively they are implemented across government institutions.
Unspent allocations raise economic concerns
Sri Lanka’s persistent failure to fully utilise its capital expenditure allocations reflects deeper structural weaknesses in public financial management and project execution, analysts and economists have warned.
Bureaucratic delays, prolonged procurement disputes, politically influenced project selection and shortages of technical expertise within line ministries have repeatedly impeded the implementation of development projects.
The Government has maintained that a substantial portion of capital expenditure typically takes place during the final quarter of the year. However, the continued concentration of spending towards year-end raises questions about the capacity of state institutions to plan, procure and execute projects throughout the budget cycle.
Low capital expenditure does not necessarily translate directly into an equivalent loss of economic output, as allocations may be affected by project readiness, financing arrangements and implementation schedules. Nevertheless, persistent underspending can delay essential investments and weaken the impact of fiscal policy on economic activity.
When projects are postponed, the anticipated benefits of new infrastructure — including lower transport costs, improved energy reliability and more efficient public services — are also delayed.
Over time, these constraints can weigh on productivity, discourage private investment and limit the economy’s potential to expand.
A challenge for post-crisis recovery
The issue carries particular significance as Sri Lanka continues its recovery from its sovereign debt default and seeks to establish a more sustainable growth trajectory.
Effective public investment is essential to addressing infrastructure gaps and removing structural bottlenecks that constrain businesses and economic activity.
Yet allocating funds in the annual Budget is only the first step. The Government must also demonstrate that it has the institutional capacity to convert those allocations into completed projects with measurable economic benefits.
Persistent underspending can also complicate engagement with development partners and undermine investor confidence in the state’s ability to implement its development priorities.
At the same time, accelerating expenditure without adequate planning, procurement controls or project evaluation could create new risks, including cost overruns, waste and corruption.
The challenge, therefore, is not simply to spend more, but to ensure that public funds are deployed efficiently, transparently and towards projects that deliver lasting economic value.
The COPF’s review of the proposed Procurement Act and the expansion of PROMIS represent steps towards addressing these longstanding weaknesses.
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