Sri Lanka has the worst record among South Asian countries in blacklisting corrupt contractors in public procurement, according to a new report by Verité Research. The report shows that Sri Lanka is the only country in South Asia that 1) does not recognise engaging in corrupt and fraudulent activities during procurement as a valid reason for blacklisting 2) has not blacklisted contractors that have defaulted on contractual obligations despite having the provisions to do so.  

The first issue can be attributed to gaps in the procurement guidelines of 2006, which govern almost all public procurement in Sri Lanka — except in a few instances such as pharmaceutical procurement.   

The report emphasizes the importance of urgently fixing these gaps to combat corruption and restore fiscal governance.   

The second issue – not blacklisting defaulting contractors – shows a lack of compliance with existing regulations. Sri Lanka has provisions not only to blacklist defaulting contractors, but also to publish their names on a public, online database.   However, this database, maintained by the Department of Public Finance, is empty. By contrast, as of July 2023, Nepal had 629 entries on its online database and Bangladesh had 510. 

 
High levels of corruption in procurement and the importance of fixing them have also been highlighted in the civil society governance diagnostic and the International Monetary Fund (IMF) governance diagnostic on Sri Lanka. In fact, one of the key IMF recommendations is to enact a public procurement law in Sri Lanka that reflects international best practices by December 2024.