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Debt management: Govt. distances itself from deals state entities sign without finance minister’s nod
View(s):By S. Rubatheesan
“The government will not be bound by any agreement, finance lease agreement, supplier’s credit agreement, derivative or any guarantee issued or purported to be contracted or issued for or on its behalf by any other entity or person, other than the minister in charge of the subject of finance or the public officer authorised in writing in that behalf by the minister,” the circular issued by the Treasury and Finance Ministry Secretary.
Complying with the PDMA Act No. 33 of 2024 and setting up a Public Debt Management Office (PDMO), all state entities—ministries, departments, district secretariats, special spending units, statutory funds, state-owned enterprises, and provincial councils—are instructed to cooperate with PDMO on all matters related to public debt, including providing necessary data and information about outstanding loan guarantees, on-lending, credit institutions involved in on-lending, and non-guaranteed debt.
As a sole entity that is responsible for managing government debt and overseeing all activities related to the management of public debt, the new PDMO will oversee the issuance and management of loan guarantees, on-lending operations, and recording and reporting of public debt, including guaranteed and non-guaranteed debt of all SOEs and PCs.
The PDMO is also authorised to manage a centralised public debt data repository and to record, maintain, and publish accurate and timely data on public debt.
“The PDMO will take over relevant functions from the Central Bank of Sri Lanka, the Department of External Resources, and the Department of Treasury Operations and will centralise the country’s debt management operations in a holistic manner as mandated by the PDMA,” the circular stressed.
The new act vests the finance minister with the power to borrow and issue debt securities within or outside the country in local or foreign currencies. “Therefore, no government entity shall initiate any borrowing, issue any debt securities, arrange any supplier’s credit as defined in the PDMA or enter into finance lease agreements unless otherwise, the minister in charge of finance has authorised to perform such activities,” the circular noted.
For those state entities that wish to receive a government loan guarantee, borrow government funds, and raise funds or debt securities, prior approval from the finance minister is required.
Under the new circular, all provincial councils are instructed to submit a record of their outstanding debt not later than 45 days after the end of each quarter.
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