The International Monetary Fund (IMF) has called on Sri Lanka to urgently implement a comprehensive legal framework to reform its public procurement system, warning that the current process is vulnerable to corruption, inefficiency, and arbitrary decision-making.
This recommendation forms a critical component of the IMF’s broader governance reform agenda, which seeks to promote greater transparency and accountability in Sri Lanka’s public financial management system. A recent IMF-backed diagnostic report exposed deep-rooted structural flaws in the procurement mechanism, citing the absence of a central regulatory authority and outdated procedures that fall short of international best practices.
The IMF cautioned that unless swift reforms—particularly the enactment of a robust Public Procurement Law—are introduced, Sri Lanka risks undermining its efforts to restore public trust and attract foreign investment.
Currently, public procurement in Sri Lanka is highly fragmented across ministries, departments, and the Cabinet. While line ministry secretaries are responsible for procurement execution, high-value contracts are often routed through Cabinet Appointed Procurement Committees (CAPCs) and ultimately the Cabinet itself. However, this process suffers from inconsistent procedures and excessive discretion in decision-making.
A landmark 2006 Court of Appeal decision highlighted this issue by ruling that the Cabinet is not legally bound to adhere to Procurement Guidelines or Appeals Board recommendations. This legal precedent has since raised concerns about unchecked power in awarding lucrative contracts.
In response, the IMF has urged the immediate activation of the National Procurement Commission (NPC), granting it full authority to oversee procurement practices and scrutinize unsolicited proposals. An 18-month action plan has also been proposed to fast-track the reform process.
A major focus of the reform agenda is the full implementation of the Procurement Management Information System (PROMISe), which remains in its pilot phase. This digital tool is designed to automate and track procurement activities—from bid submission to contract signing—but its effectiveness will depend on staff capabilities and integration with existing audit mechanisms.
To enhance transparency, the IMF recommends the government publish details of all contracts exceeding Rs. 1 billion and include data on competitive bidding levels, particularly in agencies with poor track records. These disclosures should be made biannually on a dedicated public website.
Experts emphasize that transitioning to a digital, rules-based procurement system could transform governance in Sri Lanka, especially if complemented by stronger audit processes and accountability measures.
As the nation continues to recover from a severe economic crisis, the IMF stresses that reforming procurement is essential—not only to cut wasteful spending but also to rebuild public confidence and ensure fair use of taxpayer funds.