Government agrees to settle construction sector pending payments by end-June

• Pending payments in excess of Rs.50bn to be released in coming weeks
• Dues to be settled in cash and by extending bill discount facilities
• CCI says decision taken is a “good solution” under current circumstances

By Shabiya Ali Ahlam
The repeated pleas from the construction sector for due payments from the state have finally been answered, with the government having decided to settle all certified invoices by end of June.

The government owes the construction sector an excess of Rs.50 billion, which was to be settled in September 2019. However, due to the presidential election that was held in November and the closure of the economy in March, which went on for eight weeks, the industry did not receive its pending payments. 

Chamber of Construction Industries of Sri Lanka (CCI) Secretary General and CEO Eng. Nissanka N. Wijeratne told Mirror Business that after making many representations since last September, at the Task Force meeting held last Thursday, the government announced its decision to settle the dues before the end of the month.

“The government will look to settle all outstanding certified bills by the end of this month. If it is not possible for them to do so by cash, due to the current conditions, arrangements will be made with banks to provide a bill discount facility, at 4 percent against the certified bill,” 
Wijeratne shared. 

He added that the industry has expressed satisfaction on the decision taken and finds it to be a “good solution”, given the current circumstances.  

He shared that although the bill discount facility solution was also proposed by the industry over the last few months, the banks were unwilling to extend the facility, as there is large outstanding debt and non-performing loans from the construction sector. 

“We are satisfied this came through. It will solve the bulk of our problems. The government settling the pending invoices means a wide spectrum of stakeholders in the industry will receive their due payments,” said Wijeratne.
Due to the payments delayed by the government, majority of the construction companies were unable to pay the salaries in full, during the curfew period. 

According to Wijeratne, the situation aggravated as most construction companies operate on profit margins as low as 3-5 percent, especially with the downturn of construction activities.

Meanwhile, the CCI has also requested the government to consider waiving off penalties on late payment of taxes, if all dues are settled by June 30, 2020. Wijeratne attributed the delay in tax payments to the slowdown in the construction industry.

The construction sector contributes about 8 percent to GDP and provides direct employment to approximately 650,000 persons and indirect employment to over 300,000 persons.