A damning revelation exposes how stalled projects, unpaid contractors, and reckless planning have pushed Sri Lanka’s construction industry to the brink, draining billions in public funds while taxpayers shoulder the cost of failure.
Sri Lanka Builders’ Association Chairman Susantha Liyanarachchi warns that the government’s project implementation has slowed to a critical level, revealing that only five out of 79 construction projects scheduled for completion in 2025 have actually been finished and handed over. He said that “21 government-funded projects, six foreign grant projects and 10 projects under local loans have been stopped halfway,” highlighting a collapse in project execution across the construction sector.
He explained that although the 2025 Budget allocated Rs. 1,315 billion for capital investment in the construction industry, equal to nearly four percent of the GDP, there is still no clear data on how much of that money has been released. He added that the total allocation for the 79 projects stands at Rs. 3.3 trillion, with an additional Rs. 1.3 trillion added later, while Rs. 32.6 billion is owed to contractors for the first quarter of 2025.
Liyanarachchi also noted the severe delays in foreign-funded projects, saying that out of US $5,465 million in major contracts signed by September 2022, only US $500 million had been paid. Domestic projects show 71.93 percent progress, compared to 26.53 percent for foreign-funded ones due to funding delays. He revealed that 96 ongoing government projects have already been marked under the red code for failing to meet expected results.
Despite the stalled 2025 projects, he said the government has proposed several new construction plans for 2026, including Rs. 10,500 million for Central Expressway Phase 3 and Rs. 66,150 million for Phase 1, along with Rs. 1,000 million for the Kurunegala–Dambulla Road and Rs. 31,000 million for a five-year hospital modernisation programme.
Liyanarachchi pointed to the Ratnapura Expressway as the clearest example of wasted public funds. Started in 2014, approved by Cabinet, and assigned to a contractor, the project never moved forward. The contractor has now claimed Rs. 14,000 million in lost profits. He said that although Rs. 9.4 billion was allocated in 2016 to acquire 2,910 land plots, only 849 plots were taken over. The Bank of Ceylon also failed to release Rs. 2,512 million owed to the contractor by April 2022, resulting in further compensation demands.
He warned that poor financial planning and weak management have cost the country massive sums. With state expenditure at Rs. 8,980 billion in 2026 and income at Rs. 5,305 billion, he said the Rs. 3,675 billion deficit continues to strain the construction sector. High taxes, he said, have contributed to the industry’s collapse.
Liyanarachchi urged the government to protect small and medium-scale builders and introduce an amendment to strengthen the construction industry through proper planning and better financial discipline.
