Rs. 135 bn defence allocation raises transparency concerns: top economist

By Nuzla Rizkiya

A top economist yesterday raised concerns over a potential procurement corruption process or gross misrepresentation in the government's 2025 budget, particularly regarding public sector salaries and defence expenditure.

Verité Research Executive Director Dr. Nishan de Mel highlighted a staggering Rs. 135 billion allocation under a defence sector budgetary line item, which he termed a possible "systematic concealment of public sector costs" from the general public.

Dr. de Mel referred to the increased budgetary allocation under the defence expenditure procurement category Diets and Uniforms, which rose from Rs. 70.7 billion in 2023 to Rs. 101 billion in 2024 and Rs. 135 billion in 2025, reflecting a 33 percent annual increase this year.

Although this issue was raised last year, he recalled that authorities had justified the allocation as a form of direct cash allowance to defence sector employees.

However, de Mel argued that such allowances should be classified under salaries and emoluments to ensure transparency in employee compensation rather than being disguised under procurement-related expenses.

"So this is either a case of procurement corruption or a gross misrepresentation of the cost in the budget," de Mel cautioned while addressing the post-budget forum organized by CA Sri Lanka yesterday.

He went on to question the vast allocations of funds for the defence sector by successive governments, which have resulted in Sri Lanka ranking just behind North Korea, a country known for its extravagant military budgets.

Sri Lanka's public sector has also expanded to the point where it now ranks among the top 10 countries with the largest per capita defence force size, with the sector accounting for nearly 50 percent of public sector salaries and wages.

"It is extraordinary how a small, debt-ridden country like ours continues to invest in defence at this level," de Mel said.

He urged the government to address the discrepancy and implement urgent reforms to streamline the bloated workforce to ensure fair wages for essential employees.

"We have a very bloated public sector that needs to be cut down. So such massive increases in expenditure should be tracked to understand where the money is actually going. This is a correction we should make in the budget," de Mel said.