The government has also been finding it difficult to borrow abroad.
A Treasury circular said the government had decided to "manage public expenditure very strictly during the balance period of 2008," as duty cuts were hurting revenue while defence and fertilizer subsidy costs were rising.
The instructions were issued to ministries, provincial councils, government enterprises and statutory entities, by Sri Lanka's new Treasury Secretary Sumith Abeysinghe, a senior official who had put in long years in the finance ministry.
The circular had been issued this month to curb a tendency by ministries to quickly spend any unspent money at the last minute, an official said.
The circular instructed officials to "freeze with immediate effect" all supplies and services which were not committed, and to "to stop all constructions" which have not started yet and stop purchase of capital goods, machinery and vehicles.
It also asked officials not to create new current expenditures and defer "all