By The Pulseline News Desk
Sri Lanka is planning a major overhaul of its public procurement system and changes to budgetary procedures to accelerate the implementation of capital investment projects, as persistent administrative delays continue to prevent the Government from fully utilising funds allocated for development.
President Anura Kumara Dissanayake said the existing procurement framework had become excessively restrictive, slowing project execution and undermining the effectiveness of public investment at a time when the Government plans to increase capital expenditure to around Rs. 2 trillion in the upcoming Budget.
Speaking at an event on Monday (12), Dissanayake said the Government was developing sector-specific procurement mechanisms, introducing greater flexibility and exploring electronic procurement to improve implementation.
The President, who also serves as Finance Minister, argued that the current system had been designed primarily around the procurement of physical goods, making it difficult to handle complex services, specialised technology and commercial operations.
“Our procurement system was fundamentally built on the mindset that the state apparatus is susceptible to corruption. We created layer upon layer of regulations, and the ultimate result is that the rules have become so restrictive that nothing can get done,” he said.
He added that the rigidity of the system had reached a point where it was paralysing project execution.
The proposed reforms come as concerns persist over Sri Lanka’s ability to translate budgetary allocations into actual investment, with delays in procurement and project implementation limiting the contribution of public spending to economic growth.
Capital spending falls behind
Sri Lanka has spent less than 30% of its capital expenditure allocation for 2026 during the first nine months of the year, according to figures reported by some media, citing two government sources.
Of the Rs. 1,380 billion allocated for capital expenditure this year, only around Rs. 385 billion had reportedly been spent during the period.
The shortfall highlights a longstanding problem in public financial management, with a substantial proportion of allocated funds remaining unutilised because of delays in procurement, project preparation and implementation.
Dissanayake said the Government had utilised 76% of its allocated capital expenditure last year. However, critics have questioned the composition of that spending, arguing that it included repayments relating to earlier borrowing for the Central Expressway project.
The President said the upcoming Budget would provide approximately Rs. 2 trillion for capital expenditure, representing a substantial increase compared with the allocation when the current administration assumed office.
However, the effectiveness of that increase will depend on whether ministries and implementing agencies can execute projects within the financial year.
Procurement to begin before Budget approval
One of the key changes outlined by the President involves allowing major procurement processes to begin before the relevant budget allocations are formally approved.
Under the previous practice, procurement generally commenced only after the Budget was presented and passed and the Treasury released funds to the respective ministries.
Dissanayake said this sequence frequently resulted in procurement processes extending until August or September, leaving limited time for projects to proceed during the same financial year.
The Government is now providing advance Treasury assurances for selected major projects, enabling implementing agencies to begin calling for tenders, evaluating bids and selecting contractors before the formal allocation of funds.
He cited the proposed Kurunegala–Galewela expressway as an example, saying the Treasury had assured the Road Development Authority that funding would be provided through the 2027 Budget.
This would allow the authority to begin the tender process ahead of the Budget’s approval, with the aim of awarding the contract in January 2027 and commencing construction early in the year.
The approach is intended to reduce the gap between budget approval and project implementation, allowing capital allocations to translate into actual development activity more quickly.
Sector-specific procurement rules
The President said the Government was also considering specialised procurement frameworks for sectors in which conventional procedures were poorly suited to the nature of the goods or services being acquired.
He pointed to the procurement of global promotional campaigns, complex software systems and defence equipment as areas requiring more flexible and technically appropriate procedures.
He said delays in procuring repairs for military helicopters illustrated the limitations of the existing system, with some contracts unable to be finalised within the financial year despite funds being allocated.
The Government is also examining how commercial State-owned enterprises such as SriLankan Airlines could procure operational requirements while remaining competitive in their respective markets.
Dissanayake said modern procurement mechanisms would be necessary to meet the differing requirements of public administration, commercial operations and specialised technical services.
Electronic procurement is another area under consideration, with the Government seeking to streamline procedures and improve the efficiency of the procurement process.
Skills shortage adds to implementation delays
Beyond procurement regulations, the President identified shortages of technical and managerial expertise within the public service as another obstacle to effective project implementation.
He said the State was struggling to recruit and retain information technology specialists, engineers and executive management professionals under conventional public-sector salary structures.
Dissanayake argued that specialised and competitive remuneration packages would be needed to attract professionals capable of managing increasingly complex public investment programmes.
He cited GovTech, where specialised salary arrangements had enabled the recruitment of experienced information technology professionals, as an example of an approach that could be extended to other critical areas.
The President said the Government needed to reconsider how it attracted expertise while managing a capital investment portfolio worth around Rs. 2 trillion and maintaining extensive public services in education and healthcare.
Execution remains the key test
The proposed reforms come as Sri Lanka seeks to consolidate its post-crisis economic recovery while maintaining fiscal discipline and expanding investment in infrastructure and productive capacity.
Although higher capital allocations can support economic growth, their impact depends on whether projects are implemented effectively and deliver measurable economic returns.
Persistent delays in procurement, inadequate project preparation, disputes over tenders and shortages of technical personnel have historically prevented the Government from fully utilising its development budgets.
The planned changes seek to address these constraints by bringing procurement forward, adapting procedures to sector-specific needs and strengthening the technical capacity of implementing agencies.
However, the effectiveness of the reforms will ultimately depend on whether faster procurement can be achieved alongside transparency, accountability and safeguards against corruption.
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