Sri Lanka has spent less than 30% of its 2026 capital budget in the first nine months of the year, two government sources told EconomyNext on Sunday — roughly Rs. 385 billion of an allocation the outlet puts at Rs. 1,380 billion.
That works out at 27.9%. The government expects to use the full allocation before the end of the year.
Cabinet Spokesman and Media Minister Nalinda Jayatissa said on Tuesday 6 October that “70 percent of the spending is finalized in November,” and that the government was unable to provide an update on total spending to date.
What the arithmetic requires
On EconomyNext’s figures, spending the remaining allocation means deploying about Rs. 995 billion in the final quarter — 72.1% of the entire year’s capital budget in three months.
Jayatissa’s “70 percent in November” is therefore not a loose remark. It is close to precisely what the allocation now demands, and it concentrates the burden in a single month rather than a quarter.
The denominator is not settled
Four different figures for the 2026 capital allocation are in circulation, and the execution rate depends entirely on which one is used.
| Source | 2026 capital allocation |
|---|---|
| Jayatissa, June 2026 | Rs. 1,350bn |
| EconomyNext, 11 October | Rs. 1,380bn |
| Sunday Times, 4 October | ”Rs. 1,369bn – Rs. 1,380bn” |
| Implied by the 2027 Appropriation Bill | ~Rs. 1,852.5bn |
The last figure is derived, not quoted: the Bill sets 2027 capital expenditure at Rs. 1,752.5bn and describes that as a 5.4% reduction, which puts the current-year base near Rs. 1,852.5bn. EconomyNext itself cautioned when reporting the Bill that its capital figure “does not conform to the capex in the formal budget presentation” — which is the likely explanation for a gap of nearly Rs. 500 billion.
The consequence is concrete. Rs. 385 billion is 27.9% of Rs. 1,380 billion but 20.8% of Rs. 1,852.5 billion. A stated execution percentage means little without the base it was calculated against, and none of the filings state theirs.
A conflict on the nine-month figure
The Sunday Times reported on 4 October that of the capital allocation, the government “managed to deploy a meagre 17.4 per cent, totaling roughly Rs. 240 billion, during the first three quarters of the year,” citing a fiscal performance report. That is Rs. 145 billion below EconomyNext’s number for what both describe as the same period.
One reading fits the other evidence. The World Bank, reporting its Sri Lanka Development Update on 6 October, found that only 16.7% of the 2026 capital budget had been spent by mid-year — within about Rs. 10 billion of the Sunday Times figure. The Sunday Times number looks like mid-year data carrying a three-quarter label, rather than a genuine rival count for September. This article does not treat that as settled; neither outlet has corrected or addressed the other.
Why it keeps happening
EconomyNext attributes the chronic shortfall to “deep-rooted structural inefficiencies in public financial management and project execution” — bureaucratic delays, protracted procurement disputes, politicised project selection, and a lack of technical expertise within line ministries. Analysts quoted warn of lower growth if planned investment is not delivered, and say President Anura Kumara Dissanayake’s promised process changes have yet to materialise.
The World Bank reached the same diagnosis from the other direction, attributing the shortfall to weak public investment management rather than a lack of funds, and finding the same pattern in crisis spending: about 8% of the Rs. 500 billion allocated for Cyclone Ditwah reconstruction, and less than half of the Rs. 100 billion Middle East war relief package, disbursed by mid-year.
Its conclusion carries a constraint worth noting. The government largely cannot spend more in aggregate: fiscal space created by lower interest costs and stronger revenue cannot be moved into higher primary spending without breaching the 13%-of-GDP primary expenditure ceiling under the Public Financial Management Act. With the envelope fixed, better project selection and execution are the main available levers.
Context
The under-execution flatters the fiscal accounts rather than damaging them in the short term. Revenue rose 27.2% year-on-year in the first half while spending grew 7.9%, producing a first-half surplus of Rs. 9.5 billion against a Rs. 406 billion deficit a year earlier.
Capital spending also remains a small share of the whole. The Sunday Times puts recurrent expenditure at Rs. 5,700 billion and debt-servicing interest at Rs. 2,617 billion against a capital allocation under Rs. 1,400 billion.
One promise appears to have been revised — but see the update below, where the President restates it unchanged. In May and June, the President and Jayatissa both said around Rs. 2 trillion would go to capital expenditure in 2027, described at the time as the largest such allocation in Sri Lanka’s history. The Appropriation Bill presented on 7 October sets it at Rs. 1,752.5 billion — a 5.4% cut, not an increase.
Not reported
Which ministries or sectors are furthest behind. Whether 27.9% at nine months is better or worse than the same point in previous years, and any timeline for the promised process reforms — both partly answered on 13 October, see the update below. No Treasury or Finance Ministry confirmation of the Rs. 385 billion figure has been published — it rests on two unnamed government sources — and the Sunday Times discrepancy remains unaddressed by either outlet.
Update, 14 October: the President answers on process, and does not move the Rs 2 trillion figure
President Anura Kumara Dissanayake set out the government’s response to the under-execution in an address to the Sri Lanka Economic and Investment Summit on Monday 12 October, reported by EconomyNext on Tuesday evening. It is covered in full here; three points bear directly on this article.
The process reforms are described as already operating, not promised. This article recorded analysts saying the President’s “promised process changes have yet to materialise.” His account is that the sequence has already changed: procurement used to begin only after the budget passed and the Treasury released funds to ministry secretaries, pushing awards to August or September, whereas the Treasury Secretary now guarantees funding in advance. His example is the Kurunegala–Galewela expressway, where a Treasury assurance has let the Road Development Authority tender and select a contractor before the 2027 allocation formally exists, for award in January. Sector-specific procurement rules and e-procurement are described as in development rather than in force.
A previous-year comparison, with a caveat attached. The President said his administration used 76% of allocated capital expenditure last year. That is a full-year figure, so it does not answer this article’s question about the same nine-month point in earlier years, and EconomyNext records the qualification critics attach to it — that the 76% includes past loan repayments for the central highway project.
The Rs 2 trillion figure has not been revised. The paragraph above treated the Appropriation Bill’s Rs. 1,752.5bn as a revision of the May–June promise. Five days after that Bill’s first reading, the President repeated the original number: “Our upcoming budget plans for public capital expenditure of around 2 trillion rupees (Rs.2,000 billion).” The gap of roughly Rs. 247.5 billion is therefore live rather than settled, and it may be a difference of base rather than a contradiction — EconomyNext itself warned that the Bill’s capital figure “does not conform to the capex in the formal budget presentation,” and that Budget has not yet been presented. No filing has asked the government to reconcile the two.
Both filings are EconomyNext’s, so this update adds no verified domain and does not change this article’s source rating. The Daily FT’s own summit coverage does not carry the capital-spending or procurement content, and neither Hiru News nor the Daily Mirror has filed on it.
Sources
Referenced for context, outside this article’s source window: