To bolster fiscal responsibility, and enhance budget formulation and execution, Parliament is poised to enact a new Public Financial Management Act this month. The legislation, currently in its final stages, aims to revamp the fiscal management process, guided by recommendations from the International Monetary Fund (IMF).
Outlined in a cabinet memorandum, the proposed Act seeks to instil transparency and accountability in financial systems while granting officials the autonomy to manage public finances efficiently. It will mandate reforms to modernize accounting and reporting standards, making public sector accountability a compulsory element.
Additionally, the new Act will repeal the Fiscal Management (Responsibility) Act No. 3 of 2003, ushering in updated fiscal terms set to take effect with the Budget 2025. This move comes after the original Act’s fiscal limits were repeatedly amended, leading to economic instability, as noted in an IMF report.
The forthcoming legislation is poised to enforce stringent fiscal rules with no provisions for deviation, signalling a departure from past practices. Alongside its implementation, a modern financial management system is slated for adoption to streamline budget execution across Sri Lanka’s ministries, state institutions, and statutory bodies.
Source: Sunday Times
