Central bank governor suggests Rs 25 billion release in construction dues

The government of Sri Lanka owes contractors over Rs 200 billion. Out of these dues, Central Bank Governor has mentioned in passing the settling of Rs 25 billion by the end of the year.

The Ceylon Institute of Builders notes, “As the dues for large-scale contractors are very high, we strongly recommend that these funds are utilised to settle SME sector dues first, as this would provide relief for a larger number of SME contractors.”

They added, “Allocating these funds to large-scale contractors may lead to partial satisfaction of massive dues of a limited number of contractors and would leave contractors’ finances suspended midway. It is recommended that the government can tackle large-scale contractors’ bills vias issuing treasury bills if no cash is available at this junction. In such a way, we thank the Governor for this provision, and we hope that restarting important projects in the country in 2023 would solve a large part of the problem.”

“Furthermore, the government should encourage funding agencies to continue with their funded projects in Sri Lanka. This may allow about 30-40% of contractors to survive and prevent the further retrenchment of workers and restart the SME sector companies that are part of the construction supply chain. Finally, the Governor should give priority to the settlement of the balance dues to contractors in the year 2023, as this may save contractors and their associated banking sector and finance companies.”