News
Treasury takes measures to streamline state funds
View(s):The Treasury has called for details of funds held outside the Consolidated Fund by ministries, departments, and state-owned enterprises (SOEs), as those funds will have to be wound up unless under specific circumstances and through a passage of an act in Parliament. Issuing a circular to ministry secretaries, heads of special spending units, heads of departments, district secretaries, and heads of SOEs, including corporations, statutory boards, universities, and higher education institutions, Treasury Secretary Mahinda Siriwardena stressed that no public funds could be held outside the Consolidated Fund unless under specific circumstances.
“It is reported that a significant number of statutory and non-statutory funds are in existence under different public entities,” the secretary noted.
The move to collect details of various funds in the state sector comes as part of the government’s initiative to streamline the functioning of state funds in keeping up with the provisions on statutory funds articulated under Section 39 of the Public Financial Management (PFM) Act No. 44 of 2024.
According to the Act, any non-statutory fund should cease its operations from the date of coming into operation of the Act and will be dissolved within one year from such date, and those funds should be remitted to the Consolidated Fund.
“It is necessary to carefully review the objectives for which such funds have been established, the actual need of such funds under the current context, and the legality of such funds,” Mr. Siriwardena said.
With regard to funds that have not been established through a parliamentary act, action has to be taken by the secretary to the line ministry and the chief accounting officer in consultation with the subject minister to justify in writing to the Minister of Finance why the purposes that are currently being carried out under the particular non-statutory funds cannot be carried out utilising funds allocated through the Consolidated Funds, the circular said.
If any existing non-statutory funds are deemed necessary to continue operations, the relevant ministry secretary is required to report to the Treasury Secretary, explaining the reasons and justifications to continue such funds.
The Treasury Secretary will appoint a committee to review those requests, and the line ministry will be provided an opportunity to justify its position at the committee proceedings.
The final decision on whether to continue or close those funds will be taken by the Treasury Secretary following the recommendations of the committee.
If those funds are to be maintained in the future, Cabinet approval will have to be obtained, and a new Act will have to be passed in Parliament to give legal effect, the circular said, explaining the process of the steps.
In the event of winding up a non-statutory fund, the whole process will have to be completed before July 31 next year.
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