Sri Lanka expects to fully operationalise the Public Debt Management Office (PDMO) by January 2026 after establishing the office in the fourth quarter (Q4) of 2024 under the Public Debt Management (PDM) Law.
Accordingly, it was revealed at the Committee on Public Finance (COPF) last week, PDMO which will function within the Ministry of Finance under the Proposed PDM Bill will be established by Q4 of 2024 as per the guidelines of the International Monetary Fund (IMF).
Speaking before the COPF, Deputy Secretary to the Treasury,. A.K. Senavirathna said that the proposed PDM bill will present a Medium Term Debt Management Strategy (MTDMS) for Parliament approval, based on which the Government will raise debt in the future.
He said that the debt strategy will be updated annually along with the budget over a 5 year horizon and will be based on the fiscal rules from the proposed Public Financial Management Bill following its enactment.
Moreover, speaking before the Committee, Central Bank Governor Dr. Nandalal Weerasinghe said that the Minister of Finance who will have the sole authority to raise the debt along with the PDMO will be obliged to work according to the Parliament-approved MTMDS.
He said that PDM law has given full operational autonomy to the Director General (DG) of the PDMO, to source loans as per the debt strategy.
“The Minister of Finance will not get wild powers, he has powers to implement the Parliament-approved MDMS and within that DG PDMO has the operational autonomy on how to source the debt,” he said.
Further, the Director General of the External Resources Department Ajith Abeysekara said that the Government has continuous discussions with the IMF, on the issues that would be caused if the public debt powers were centralised to an independent authority. The IMF conditions wanted Sri Lanka to establish an independent debt management authority instead of PDMO.
Abeysekara said that establishing an independent authority to manage public debt is difficult due to the traditional democratic society in Sri Lanka. “That's why a PDMO with operational autonomy is established within the Treasury under the Finance Minister,” he added.