ECONOMYNEXT — Sri Lanka’s main opposition party the Samagi Jana Balawegaya (SJB) has expressed conditional support for the Public Finance Management Bill but not for he Economic Transformation Bill, SJB MP Harsha de Silva said.
MP de Silva, who also chairs the parliamentary Committee on Public Finance (COPF) tweeted Thursday July 25 afternoon that the SJB has expressed support for the Public Finance Management Bill but also proposed an amendment to what he called the bill’s “unrealistic” primary expenditure limit.
The SJB’s opposition to the Economic Transformation Bill, he said, was “not because of ideology but because the forced International Monetary Fund (IMF) targets” into the bill with weeks to go to Sri Lanka’s presidential election.
COPF, which de Silva chairs, passed the Public Financial Management bill on July 11. The bill, once enacted, would replace the Fiscal Management (Responsibility) Act.
The MP said at the time that the new bill clarifies fiscal rules, strengthens budgeting and enhances scrutiny.
“However I oppose arbitrary primary expenditure cap as it will restrict needed public investment to achieve 10 percent growth req to be HIC by 2040. We will amend soon!”
The bill had set a 13 percent primary spending limit (expenses before interest) as part of efforts to improve fiscal discipline in the future.
Treasury Secretary Mahinda Siriwardana said in May that the Public Finance bill will be a landmark piece of legislation that will provide the guidance and framework to go forward.
A Fiscal Management Responsibility Act, which has been repeatedly breached in the past will be repealed.
Siriwardana said the new law makes it less easy for future administrations to overspend.
The law, which sets a 13 percent of GDP spending limit (before interest costs), allows for a 2 percent ‘budget reserve’, according to the draft bill.
The 13 percent spending limit can be exceeded if there are “unanticipated events or natural disaster posing significant threats to national security, national economic security or the public health and safety of the country which necessitate additional, temporary and targeted public expenditure beyond any contingencies included in the annual budget.”
Sri Lanka in 2023 only had a 10.5 percent of GDP primary spending volume with 8.9 percent as interest.
Transparency International Sri Lanka (TISL), a non government organisation, in June filed legal legal action in the Supreme Court against the bill, raising concerns over public procurement.
It said the bill “seriously weakens the controls on public procurement, thereby enhancing the corruption risk and weakening the level playing field.”
The Bill grants the Finance Minister the discretion to exempt State Owned Enterprises (SOEs) from compliance with the National Procurement Guidelines, while permitting Provincial Councils to adopt their own procurement guidelines, it said.
“The National Procurement Guidelines are issued with the approval of the Cabinet of Ministers to enhance the transparency of the Government procurement process, minimize delays, and obtain the most financially advantageous and qualitatively best services and supplies for the nation,” the TISL said in its petition.
“The level of corruption and bribery in Sri Lanka does not justify a relaxation or loosening of the oversight and protection against such risks.” (Colombo/Jul25/2024)