By: Staff Writer

November 01, Colombo (LNW): Sri Lanka’s public procurement system long plagued by inefficiency, corruption, and lack of oversight—has come under renewed scrutiny from the International Monetary Fund (IMF), which has called for the immediate enactment of a comprehensive Public Procurement Law to restore transparency and accountability in government spending.

In its latest governance diagnostic report, the IMF has warned that the country’s current procurement process, marked by opaque tendering and excessive political discretion, poses a serious threat to economic recovery and investor confidence. The Fund’s call forms part of its wider governance reform agenda under the Extended Fund Facility, aimed at tightening public financial management and ensuring responsible use of taxpayer funds.

The IMF report identifies systemic flaws—including the absence of a central regulatory authority, outdated procurement regulations, and excessive Cabinet-level discretion in awarding major contracts. Procurement decisions are currently scattered across ministries and departments, while high-value contracts are funneled through Cabinet Appointed Procurement Committees (CAPCs) before reaching the Cabinet for final approval. However, the lack of obligation to follow CAPC recommendations has led to inconsistencies and opened doors for irregular decision-making.

A landmark 2006 Court of Appeal ruling underscored these weaknesses, stating that Cabinet decisions were not legally bound by procurement guidelines or appeals board recommendations—effectively legitimizing discretionary power in contract awards. This, according to the IMF, has eroded public confidence and created fertile ground for corruption.

To address these weaknesses, the IMF has urged the government to operationalize the National Procurement Commission (NPC) without delay, empowering it with full regulatory and oversight authority. The Fund also recommends the implementation of an 18-month action plan to speed up the reform process.

Another central pillar of the proposed reforms is the Procurement Management Information System (PROMISe), currently in pilot phase. This digital platform aims to automate procurement procedures, track progress from bid submission to contract signing, and improve monitoring. However, its success, the IMF cautions, will depend on staff capacity, coordination with audit systems, and strong political will.

To enhance transparency, the IMF suggests that the government publish all public procurement contracts above Rs 1 billion, along with details on the level of competitive bidding, every six months on a publicly accessible website.

Experts agree that moving toward a digital, rule-based procurement system could transform public financial management provided reforms also strengthen audit frequency and accountability mechanisms.

As Sri Lanka strives to rebuild after its worst economic crisis in decades, the IMF’s message is clear: reforming public procurement is not just about saving money it’s about restoring public trust and ensuring every rupee is spent fairly and efficiently.