Proposed Public Financial Management Act set to come into effect with 2025 budget

10 May 2023 08:22 am Views - {{hitsCtrl.values.hits}} 4 Bookmark

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In a bid to bring in much needed fiscal discipline, the Government will introduce a new Public Financial Management Act (FMA) equipped with binding fiscal rules, which is set to come into effect with the budget 2025.

Bandula Gunawardana

President Ranil Wickremesinghe in his capacity as the Minister of Finance, Economic Stabilisation & National Policies on Monday sought the approval of Cabinet Ministers to initiate the necessary steps to introduce a new Public Financial Management Act to be implemented with the 2025 budget, and simultaneously to repeal the Financial Management (Responsibility) Act (FMRA) No. 3 of 2003.

Although, the FMRA has been in place for nearly three decades, Cabinet Spokesperson Minister Bandula Gunawardana pointed out that successive governments have never complied with the fiscal targets stipulated in the Act, which ultimately resulted in the current economic crisis.

Under the FMRA, the fiscal deficit was to be maintained below 5 percent of GDP while maintaining public debt at 65 percent of GDP and public guaranteed loans at 4.5 percent of GDP.

In contrast, Gunawardana noted that the budget deficit shot above 10 percent of GDP while public debt and public guaranteed loans reaching 125 percent and 15 percent of GDP at present.

The proposed FMA is set to include measures when the government could deviate from fiscal rules under extreme conditions in order to bring the public finances back to compliance.

“The Act provides for non-compliance with State’s financial rules only with the approval of parliament in extraordinary cases. However, the Act does not include provisions for deviating from those terms.

The Act does not specify the measures to be taken in the event that the set goals cannot be met in accordance with the provisions of the Act,” the Government Information Department said.

The proposed FMA is also a key condition of the International Monetary Fund’s Extended Fund Facility.

Comments - 4

Gong Bandu Wednesday, 10 May 2023 12:48 PM

This mattaya says that this FMRA had been in place for nearly three decades but had not been complied with by successive Governments . What is the assurance that this will be complied with now or in the future ?

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Sivalingam Thursday, 11 May 2023 07:25 AM

SL people keep rotating the crooks and expect different results.

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VJ Thursday, 11 May 2023 08:21 AM

The governments that governed this country prefer rules with plenty of holes that will allow them to steal with impunity. Watching the events taking place in the parliament gives the world an indication about the quality of our elected members of parliament. This country never progressed in 75 years and there is no indication it will in the near future. Why can’t they adapt a public standard of accounting such IPSAS used by many developed countries. An ERP system is a must and in addition a performance evaluation system for all public servants must be implemented to cleanse the system of dead wood. If this can’t be done, we are doomed.

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Janapala Hulangoda Thursday, 11 May 2023 04:12 PM

Do not show your ugly face in public as small children will cry together with adults!

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