IMF urges swift action to clean up Public Procurement System
The International Monetary Fund (IMF) has urged Sri Lanka to enact an effective legal framework in public procurement soon as the current tender process provides sufficient opportunity for corruption, wastage, and irregular decision-making.
The call is under the umbrella of a broader IMF-supported governance reform agenda for encouraging transparency and accountability in the public financial management of the country.
A diagnostic study of IMF governance had identified serious structural weaknesses in the public procurement system, including the absence of a central, independent regulatory authority and outdated procurement policies no longer aligned with best international practices
The report warns that without such speedy reform—most importantly, enactment of a comprehensive Public Procurement Law—Sri Lanka’s attempts to rebuild public trust and regain foreign investment will remain adversely affected.
Sri Lankan procurement today is highly decentralised and scattered at ministerial, departmental, and cabinet levels.
Although line ministry secretaries are given the responsibility of its execution, high-value contracts have to go through Cabinet Appointed Procurement Committees (CAPCs) and eventually the Cabinet itself.
But this is tainted by the lack of procedural consistency, the large discretion left in the hands of Cabinet for giving contracts, and the lack of following CAPC recommendations.
This discretionary power was notoriously asserted in a 2006 Court of Appeal ruling, which held that Cabinet decisions were not judicially bound by Procurement Guidelines or Appeals Board reports—raising further fears of un-checked discretion in the award of massive public contracts.
In response, the IMF has recommended the immediate operationalisation of the National Procurement Commission (NPC) with a complete mandate and governance responsibility over such unsolicited proposals for projects. An 18-month action plan is also being recommended in a bid to speed up reform.
Another key part of the overhaul is putting into effect the Procurement Management Information System (PROMISe), now still in pilot phase with limited implementation.
Whereas PROMISe may help boost monitoring by automating and tracking the procurement process—from bid submission to contract signing—how efficiently it will do so will hinge on its effective application, capacity of the staff, and harmonisation with audit mechanisms.
To increase transparency, the IMF further recommends that the government, from time to time, publish all public procurement contracts above Rs.1 billion and also detail competitive bidding levels, particularly in the agencies with the worst records. Such details should be released every six months on a stand-alone website.
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