COLOMBO — Parliament’s Committee on Public Finance has examined plans for a new procurement law and digital reforms as Sri Lanka struggles to convert budget allocations into completed development projects.
Sri Lanka’s Government has reportedly utilised only Rs. 385 billion of the Rs. 1,380 billion allocated for capital expenditure during the first nine months of 2026, leaving approximately Rs. 995 billion unspent with just three months remaining in the financial year.
The figures, attributed to government sources familiar with the expenditure data, indicate that approximately 28% of the annual allocation had been utilised by the end of September.
The slow pace of spending has renewed attention on longstanding weaknesses in public procurement, including tender delays, administrative approvals and the release of funds for development projects.
Against this backdrop, Parliament’s Committee on Public Finance (CoPF), chaired by Opposition MP Dr. Harsha de Silva, reviewed progress on a proposed Procurement Act and measures intended to improve the efficiency and transparency of government purchasing.
The committee’s October 20 meeting also examined delays affecting essential supplies, the expansion of electronic procurement monitoring and the disclosure of ownership information relating to companies awarded state contracts.
Capital Expenditure Falls Behind Budget Allocations
The reported gap between allocated and utilised funds illustrates the difficulties facing the Government in implementing development programmes within the financial year.
Capital expenditure supports public investment in infrastructure and other projects intended to improve economic capacity and public services.
Delays in completing procurement procedures, securing approvals and processing payments can prevent approved projects from advancing according to schedule.
In some cases, expenditure may also be recorded later in the year, after contractors submit invoices or complete agreed stages of work.
Cabinet Spokesman and Minister Nalinda Jayatissa has previously explained that a substantial proportion of public investment spending is finalised during the closing months of the year.
The Government has maintained that it expects to utilise the allocation more fully before year-end.
Nevertheless, the reported utilisation rate demonstrates the scale of the implementation challenge.
While the difference between the allocation and spending to date is approximately Rs. 995 billion, that amount should not automatically be interpreted as money permanently lost or projects definitively cancelled.
The final outcome will depend on procurement progress, project execution and payments recorded during the remaining months.
Nearly Rs. 2 Trillion in Planned Capital Spending
The procurement delays carry additional significance as President Anura Kumara Dissanayake’s administration prepares a capital expenditure programme approaching Rs. 2 trillion for 2027.
Cabinet statements have indicated that the Government intends to accelerate procurement and approval procedures to support higher public investment.
An increase in budget allocations, however, will not necessarily translate into faster development unless the institutions responsible for implementing projects can manage the additional workload.
President Dissanayake, who also serves as Finance Minister, has identified existing procurement procedures as an obstacle to the timely execution of capital-funded projects.
The Government is consequently examining changes to procurement rules and the coordination of budget and purchasing schedules.
The effectiveness of those reforms will be tested by whether ministries and other public institutions can turn larger allocations into projects delivered within their approved timeframes.
Committee Reviews Proposed Sri Lanka Procurement Act
At its October 20 meeting, CoPF examined the progress of legislation intended to strengthen the legal framework governing public procurement.
The proposed Procurement Act is designed to provide a clearer statutory foundation for existing guidelines and circulars while addressing administrative and procedural weaknesses.
Discussions covered delays in obtaining observations from ministries and public institutions, constitutional requirements and difficulties encountered during revisions to the draft.
Committee members also considered raising the financial limits within which procurement committees can make decisions, potentially reducing the need for repeated approvals.
Other proposals included long-term framework agreements for frequently purchased goods and services, alongside specialised procurement guidelines for sectors with particular operational requirements.
The procurement of pharmaceuticals received specific attention because delays in purchasing and medicine registration can affect the availability of essential supplies.
Construction procurement was also identified in the source commentary as an area requiring more specialised guidance.
These changes are intended to reduce unnecessary delays without weakening oversight of public expenditure.
Transparency and Beneficial Ownership Disclosure
Greater transparency in the awarding of government contracts is another central objective of the proposed legislation.
Sri Lanka’s reform commitments under the International Monetary Fund programme include strengthening procurement safeguards and requiring the disclosure of beneficial ownership information.
Such disclosures would help identify the individuals who ultimately own or control companies competing for public contracts.
The information is intended to make it easier to detect potential conflicts of interest, concealed relationships and corruption risks.
CoPF also examined proposals concerning the disclosure of ownership information relating to successful bidders and whether companies had previously been blacklisted.
A more transparent procurement process could reduce opportunities for improper political influence while allowing greater scrutiny of how public money is spent.
The effectiveness of these requirements will depend on the accuracy of the disclosed information, verification procedures and enforcement where companies fail to comply.
World Bank Grant Supports Digital Procurement
The Government is also pursuing the digitalisation of procurement monitoring through the Procurement Management Information System, known as PROMIS.
According to information presented to CoPF, the system currently covers 394 active procurement units, including units operating across 19 ministries.
Plans have been outlined to extend its coverage to provincial councils and government departments by 2027.
The World Bank has provided a US$4.5 million grant to support the development and implementation of the system.
During the committee meeting, officials reported that the technical evaluation for selecting a new developer had been completed and submitted to the World Bank for approval.
The process follows delays involving the previous contractor.
Digital monitoring is expected to improve the recording and tracking of procurement activities, making it easier to identify procedural delays and strengthen administrative oversight.
However, PROMIS monitoring should not be confused with the completion of the Government’s wider electronic government procurement framework.
The IMF has previously reported delays in the broader e-procurement programme, with full rollout projected for December 2028 in its earlier assessment.
The distinction is important when evaluating progress against different implementation targets.
Training, Audits and Enforcement Remain Essential
Although legislative and digital reforms could improve public procurement, their success will depend on how effectively the new systems operate.
Officials responsible for tender evaluation, contract administration and financial approvals will need sufficient training to apply revised procedures consistently.
Independent auditing of procurement records and electronic data will also be necessary to ensure that digital systems improve transparency rather than merely reproduce existing administrative weaknesses.
Complaints involving tender irregularities must be examined promptly, supported by procedures capable of identifying conflicts of interest and holding those responsible accountable.
Better coordination between ministries, procurement authorities, regulators and contractors will be equally important in avoiding delays that prevent approved projects from proceeding.
A law can establish responsibilities, and a digital platform can record transactions, but neither can guarantee efficiency without competent administration and effective enforcement.
Development Delivery Will Determine Success
Sri Lanka’s proposed procurement reforms are being considered at a time when the Government faces pressure to improve public investment while meeting its fiscal commitments.
The reported utilisation of approximately 28% of this year’s capital allocation underscores the importance of addressing delays before an even larger expenditure programme is introduced.
CoPF’s examination of the new legislation, beneficial ownership disclosure and digital procurement monitoring represents an attempt to address weaknesses that have affected successive development programmes.
The decisive measure of success, however, will not be the number of regulations enacted or systems introduced.
It will be whether allocated public funds can be converted into completed projects, delivered on time, at a reasonable cost and with sufficient transparency to demonstrate value for taxpayers.
With the 2027 capital expenditure programme approaching Rs. 2 trillion, the Government’s ability to resolve existing procurement bottlenecks will be an important test of its economic management.
