LEN - www.lankaenews.com | Can’t the government reverse the tender process that wastes Rs. 300 billion annually?

Can’t the government reverse the tender process that wastes Rs. 300 billion annually?

By Shantha Jayaratne

(Lanka-e-News -29.Dec.2024, 7.50 PM)

Government Tender Corruption and the Rs. 300 Billion Loss

According to the Ministry of Finance website, the Sri Lankan government lost Rs. 300 billion in 2023 due to corruption in government tenders. This figure accounts for about 1% of the Gross Domestic Product (GDP).

For perspective, the government’s annual allocations for education in 2024, 2025, and 2026 are Rs. 181 billion, Rs. 189 billion, and Rs. 198 billion, respectively. If procurement-related corruption were reduced by 50%, government expenditure on school and higher education could significantly exceed the current allocation of 1.5% of GDP.

Attempts to Digitize Procurement

In 2017, the Ministry of Finance initiated an E-Government Procurement (eGP) Office and launched a platform named PROMISe. As of now, 3,869 vendors and 669 government procurement entities are registered on the eGP platform, and 447 tenders are currently active.

While digital systems like PROMISe aim to reduce corruption and improve efficiency, lack of proper implementation and transparency undermines these efforts. The Ministry itself highlights this concern.

Lack of Transparency in Procurement

The main cause of corruption in tenders is the lack of transparency. Only 35% of government tenders are published online, and less than 9% of institutions provide the mandatory disclosures required under the 2016 Right to Information Act (Regulation 20).

A circular issued on December 17, 2019 (No. 08/2019) required government institutions to publish procurement details on PROMISe. However, compliance has been weak, and reminders, such as the letter dated April 19, 2023, have had little effect.

Despite these challenges, the Ministry claims the PROMISe system will fully support the inclusion of details for both National Competitive Bidding (NCB) and International Competitive Bidding (ICB) tenders by 2024. However, this is yet to be realized.

International Attention: IMF and Governance Reforms

The International Monetary Fund (IMF), in its Debt Sustainability Analysis (DSA), has identified government procurement corruption as a significant factor in Sri Lanka’s economic collapse. The IMF’s Governance Diagnostic Assessment (GDA), the first of its kind in Asia, proposed 16 key recommendations to combat corruption and improve governance.

Short-term and medium-term conditions outlined in the GDA include:
    1.    Revising anti-corruption laws and institutions.
    2.    Strengthening the Attorney General’s powers to impose surcharges on misuse of public funds.
    3.    Making procurement processes more transparent.

Failure to meet these conditions could hinder the $2.9 billion Extended Fund Facility agreement with the IMF.

The Role of the Bribery Commission

The Commission to Investigate Allegations of Bribery or Corruption (CIABOC), despite being an independent body, has faced criticism for its lack of autonomy. For instance, President Ranil Wickremesinghe appointed commissioners without recommendations from a special advisory committee, raising concerns about impartiality.

What Needs to Be Done?

One critical GDA recommendation is to amend the National Audit Act to hold officials accountable for misuse of public resources. Yet, this has not been implemented. If the government genuinely implements the 16 IMF GDA recommendations, the massive losses due to procurement corruption can be reduced.

It is imperative that the new government addresses these recommendations to restore transparency, accountability, and public trust.