Government spending on the Public Sector Investment Programme (PSIP) has fallen by 67 per cent year-on-year, official data showed, as delayed government payments and a lack of new projects fuel concerns among contractors about the future of infrastructure development across the country.
As of 19 June, the government had disbursed MVR 1.6 billion ($98 million) for PSIP projects, down sharply from MVR 4.8 billion during the same period last year, according to figures from the Ministry of Finance.
The largest share of expenditure so far this year has gone to airport development, with MVR 540.5 million spent. Land reclamation projects followed with MVR 226.4 million, while MVR 165.5 million has been spent on the Thilamalé Bridge. Harbour development accounted for MVR 110.2 million, water and sewerage infrastructure for MVR 49.8 million, and environmental protection projects for MVR 161.4 million.
The state budget for this year includes a total allocation of MVR 12.3 billion for PSIP projects.
Analysts attribute the sharp decline in spending to delayed payments to contractors and a lack of new projects. The government has reportedly missed scheduled payments for ongoing work, leaving many contractors unpaid for months. Several companies have raised concerns publicly, while some smaller firms have declared bankruptcy after being unable to meet payroll and cover operating costs.
Only a handful of new PSIP projects have been launched this year, further impacting the already strained construction and infrastructure sectors.
Despite growing frustration in the industry, the government has not publicly addressed the situation. Instead, a number of the limited ongoing projects have been handed over to state-owned enterprises, sidelining private contractors who say they are being left stranded with no clear path forward.