Sri Lanka risks weakening its global leverage with international creditors and donors if public project implementation and capital fund disbursement remain inefficient, the United Nations Development Programme (UNDP) said.
Speaking at a lecture organized by the Belt and Road Initiative of Sri Lanka, UNDP Country Economist Dr. Vagisha Gunasekara warned that low execution rates undermine external funding requests.
Figures from the World Bank and the national government revealed that public investment has stalled despite healthier revenue collection and Treasury reserves.
Official data showed that authorities had spent just under seventeen percent of the allocated capital budget by the middle of the year.
Dr. Gunasekara noted that external lenders will question requests for additional financing when allocated funds remain unused in state accounts.
The economist highlighted that the national economic recovery remains exposed to ongoing Middle Eastern tensions, rising global fuel prices, and a returning current account deficit.
Recent economic statistics indicated that domestic inflation climbed to eight percent in August.
Financing needs are further strained by lingering recovery costs from Cyclone Ditwah, which struck late last year and generated estimated damages of three billion four hundred million US dollars.
Impending climate disruptions, including predicted El Nino rainstorms and extended droughts, threaten agricultural output, energy supplies, and overall food security.
Debt statistics reflect a gradual easing of domestic obligations, with interest costs falling from eighty rupees per hundred collected in tax during previous years to forty-six rupees by last year.
The government aims to reduce interest expenses further to thirty-five percent of total revenue by the end of the decade through domestic bank borrowing and extended repayment maturities.
Reallocating debt servicing savings into national priorities grants the state greater fiscal flexibility to improve living standards across the country.
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