FINANCIAL CHRONICLE – A senior official from Sri Lanka’s Finance Ministry has disclosed that the country has utilized only 17.4 percent of its total capital expenditure budget of Rs. 1,380 billion for the current year. According to Jude Nilukshan, the Director General of the National Budget Department, approximately Rs. 240 billion has been spent from the budget allocated for 2026. This information was shared during a session of the Parliament Committee on Public Finance (CoPF) last week.
Nilukshan indicated that while some procurement processes have commenced, it is anticipated that there will still be unspent capital expenses by the year’s end. His remarks came in response to inquiries regarding an additional Rs. 20 billion requested by the government to address rising expenditures following a fuel price increase. Treasury officials clarified that this Rs. 20 billion is not a new allocation, but rather a reallocation from other budget items.
“Given that we cannot determine the exact amount immediately, we have set aside Rs. 20 billion for now. Historically, most capital expenditures tend to occur in the last quarter of the fiscal year,” Nilukshan noted.
Experts and economists highlight that Sri Lanka’s ongoing challenge in fully utilizing its capital investment budget points to entrenched structural inefficiencies in public financial management and project implementation. Year after year, the country faces bureaucratic hurdles, prolonged procurement conflicts, politicized project selection processes, and a shortage of technical expertise within relevant ministries, resulting in a substantial portion of capital funds remaining unused.
This underutilization of capital not only poses immediate challenges but also threatens long-term implications for the nation’s economic development. By not investing allocated resources into crucial infrastructure such as transportation systems, upgraded power grids, and advanced digital services, the government hampers productivity growth, exacerbates systemic bottlenecks, and diminishes the potential for overall gross domestic product (GDP) growth.
In a delicate post-default economic environment, this ongoing funding shortfall may also convey a detrimental message to international development agencies and private investors. It underscores an institutional incapacity to effectively mobilize capital, thereby hindering the essential structural reforms needed to manage a significant historical debt burden.
(Colombo/June 15/2026)
