18 July 2024 01:32 am Views - 117
By Yohan Perera
The Committee on Public Finance (COPF) yesterday announced it approved the proposed Public Finance Management Bill but raised few questions on how the legislation is going to address certain issues.
COPF Chairman Harsha de Silva questioned how the bill would address the inaccuracy of revenue assumption, which has been existing for 50 years.
“Assumptions made on revenues have been inaccurate for the last 50 years and the chair of the committee questioned as to how the bill would address this issue,” a statement from the COPF said.
Furthermore, de Silva was of the view that such a bill should focus not only on debt sustainability but also economic growth. He said that the targets of the Public Financial Management Bill should align with the Economic Transformation Act.
The COPF members emphasised that the proposed 13 percent primary expenditure limit for Sri Lanka creates issues pertaining to tax and expenditure when it comes to promoting growth, efficiency and spending for social welfare. Additionally, it positions Sri Lanka as the only country to set such a low GDP-based limit on primary expenditure. He stressed that with this constrain, achieving the 10 percent growth rate by 2024 is questionable.
The committee questioned the officials present regarding the medium-term fiscal framework for the upcoming financial year and the next four years. They also stressed the need for a fiscal strategy statement, which must include a primary balance target, a primary expenditure ceiling, fiscal aggregate projections and economic assumptions.