FINANCIAL CHRONICLE – Sri Lanka is strategically investing in capital projects following thorough feasibility studies to ensure long-term economic benefits, according to Treasury Secretary Harshana Suriyapperuma. This approach marks a shift from previous practices that resembled current spending aimed at a quick economic boost, a method often criticized by classical economists as ‘heedless spending’.
Historically, Sri Lanka’s capital expenditure strategy was influenced by a macroeconomic perspective, focusing on immediate economic growth through a ‘multiplier effect’. However, critics argue that such an approach resulted in ‘white elephant’ projects, which burdened the country with debt without yielding positive economic returns.
Suriyapperuma highlighted that by 2025, Sri Lanka had achieved approximately 75% of its capital expenditure targets, a significant accomplishment given the new administration’s limited timeframe to implement the budget. Speaking at an event organized by the American Chamber of Commerce, he emphasized the importance of a robust process in capital expenditure execution.
“The most important part is the process that we adopt in order to achieve that capital expenditure,” Suriyapperuma stated. “This includes understanding project readiness and ensuring feasibility studies are in place to guarantee that investments yield economic returns in subsequent years, unlike past approaches.”
He further explained that previous spending was often reflected as GDP growth, but lacked sustainable economic returns. The revised process now ensures that budget allocations are backed by ready-to-implement projects and comprehensive feasibility studies, ultimately benefiting citizens, the economy, and businesses.
Experienced civil servants recall a time when Sri Lanka had a committee of development secretaries, who meticulously prioritized projects from various ministries. Unfortunately, this system deteriorated, leading to a situation where ministry secretaries were pressured into endorsing projects influenced by external interests, often resulting in economically unviable initiatives.
The Ruwanpura Expressway serves as an example, with the National Physical Planning Department previously expressing concerns over its potential ecological impact. Analysts suggest that such projects, which may exacerbate environmental issues, require careful re-evaluation.
Additionally, some capital expenditures have been directed towards loss-making state enterprises, providing short-term economic demand but offering no lasting benefit to the nation.
(Colombo/Mar02/2026)
