Following the suspension of financing of road development projects by foreign development agencies and current fiscal constraints, the government is struggling to settle the arrears of about Rs.100 billion owed to contractors and their sub-contractors. 

“The government doesn’t have funds to settle these arrears. The foreign-funded projects have come to a halt, as these foreign funding agencies temporarily stopped financing after the country’s pre-emptive default on foreign debt,” Cabinet Co-Spokesperson and Mass Media, Transport and Highways Minister Bandula Gunawardane told reporters in Colombo, yesterday.

As a result, he noted that some of these road construction projects, which have been partially completed, particularly in rural areas, have been abandoned by contractors, as they struggle to make the payments to their suppliers and 
workers.

The Asian Development Bank (ADB)-funded iROAD 1 and iROAD 2 projects are among one of such key road development projects, where funding has come 
to a halt.

Therefore, the Cabinet cleared a proposal presented by Gunawardane to enter into negotiations to obtain US $ 243 million and US $ 200 million funds from the ADB in relation to phase five of the iROAD 1 programme and phase four of the iROAD 2 programme.

According to the Government Information Department, 140 civil work contracts have been awarded for upgrading and maintenance of 6,250 kilometres of rural roads and 750 kilometres of national highways under the iROAD 1 and iROAD 2 projects and approximately 4,800 kilometres of rural roads and 300 kilometres of national highways have been completed as of now.

However, Gunawardane acknowledged that the foreign funding agencies are likely to delay the financing until the International Monetary Fund approves the bailout package requested by Sri Lanka.