ECONOMYNEXT – Sri Lanka is addressing economic challenges and governance issues through legislative changes, State Minister of Finance Shehan Semasinghe has said.
“By reducing key input costs, enhancing competition, and implementing frameworks for renewable energy and telecommunications, these reforms are laying the groundwork for sustainable growth,” Semasinghe said on X (twitter).
The efforts are a step toward rebuilding the nation’s economy and reinforcing institutional integrity, Semasinghe said.
Sri Lanka is 11 days from choosing a new leader, and political parties are campaigning on promises to strengthen the economy after the 2022 crisis.
Under President Ranil Wickremesinghe’s government, which Semasinghe is a part of, things have stabilized, even though international financial bodies including the IMF have said that Sri Lanka is on a “knife edge path” which “could easily go back to a vicious cycle”.
From 2022 to 2024 Sri Lanka passed the highest number of law reforms in the country.
“This is not to say that things are perfect, there are still many shortcomings, but the mechanisms are being put in place to ensure a durable improvement in terms of combatting corruption and delivering good governance,” Semasinghe said.
The state minister listed the following key legislative reforms, which he said were powering Sri Lanka’s path to economic recovery.
Strengthening the Foundations:
21st Amendment to the Constitution – Passed in October 2022, provides for the re-introduction of independent commissions (including Election Commission, Audit service commission, human rights commission, commission to investigate bribery and corruption, and the national procurement commission) and the Constitutional Council to ensure appointments independent of the executive. These and other key amendments help restore the required checks and balances between the legislature and the executive to ensure effective democratic governance. http://documents.gov.lk/files/act/2022/10/00-2022_E.pdf
Anti-Corruption Act – Passed in August 2023, provides a comprehensive legislative framework to investigate and address corruption related vulnerabilities. http://documents.gov.lk/files/act/2023/8/09-2023_E.pdf
Regulation of Election Expenditure – Passed in January 2023, provides the legislative framework to regulate and enhance transparency of election campaign financing. http://documents.gov.lk/files/act/2023/1/03-2023_E.pdf
Proceeds of Crime Law – Cabinet approved the draft of the legislation on 12th August 2024. This law will provide the legal framework for seizure of assets obtained through corrupt practices and unlawful practices. The draft bill will be gazetted for submission to parliament shortly. https://www.moj.gov.lk/images/2024/Legal/Propossed-law-on-Proceeds-of-crime.pdf
Publication of asset declarations – Empowered by the Anti-Corruption Act, the government began publishing asset declarations of key government officials including politicians and key public servants from 31st July 2024. https://ads.ciaboc.lk/
Beneficial Ownership – Amendments to the Companies Act have been drafted and gazetted such that there is increased transparency and disclosure with regard to beneficial ownership. This reduces the risk of individuals masking assets through opaque corporate structures. http://documents.gov.lk/files/bill/2024/8/541-2024_E.pdf
Public Financial Management Act – Passed in July 2024, this law provides for rules on enhanced fiscal transparency, creating greater accountability in the usage of public funds. http://documents.gov.lk/files/act/2024/8/44-2024_E.pdf
Independence of State Owned Banks – Boards of Directors of state owned banks will have a majority independent directors to reduce risks of government dominated decision making, including in lending practices. https://www.treasury.gov.lk/api/file/815b4ab9-f658-4954-8f31-09c9cf21f0d8
Fiscal Governance – The government undertook proactive steps to improve fiscal governance including enhanced transparency with regard to procurement (https://promise.lk/?p=public_cont&a=view_proc_awarded_public), tax holidays and tax exemptions (https://www.treasury.gov.lk/web/tax-certificates-issued-under-boi), vehicle permits (https://www.treasury.gov.lk/web/luxury-tax-exemptions). Such disclosures had not taken place in the past. The government has also established dedicated anti-corruption units at key revenue collection agencies which have hitherto shown significant corruption vulnerabilities.
Governance Diagnostic Review – To obtain an independent assessment of governance gaps and corruption vulnerabilities, the government requested the International Monetary Fund to conduct a Governance Diagnostic, which was published in September 2023 (https://www.treasury.gov.lk/api/file/d0bbb4a3-3b7f-4b2e-98ae-fdecc0181788) and the government published its implementation action plan in February 2024 (https://www.treasury.gov.lk/api/file/5e0c54aa-62cd-4ac3-846a-9073dfc653c6).
(Colombo/Sep10/2024)