IMF recommends 16 priority tasks to improve Sri Lanka governance

The International Monetary Fund’s (IMF) corruption-busting governance diagnostic report has made 16 priority recommendations for Sri Lanka to improve the island nation’s governance system, IMF sources divulged.

Sri Lanka is the first country in Asia to undergo an IMF governance diagnostic under the global lender’s key structural reform to address corruption vulnerabilities and enhance growth.

The Sri Lanka Governance Diagnostic Assessment (GDA) September 2023 by the IMF has revealed that social tensions remain high in the island nation due to falling real incomes.

The Diagnostic Assessment reveals that the absence of visible progress on addressing corruption and holding officials to account for past behaviour raises popular concerns that officials will continue to enjoy impunity for their misconduct.

The GDA has recommended to establish an Advisory Committee, composed of independent experts on anticorruption to assist in the nomination of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) Commissioners and the Director General by November 2023.

Publication of Asset Declarations for senior officials (President, Prime Minister, ministers) on a designated website has to be completed in line with the Anticorruption Law by July 2024

Government has to enact proceeds of crime legislation that is fully aligned with UNCAC and FATF standards by April 2024.and a Public Procurement Law that reflects international good practice by December 2024.

It has been directed to amend the National Audit Act to enable the Auditor General to levy surcharges on officers, including Chief Accounting Officers, for failure to properly discharge responsibility for oversight and accountability for use of public resources.

Another recommendation was to finalise and implement regulations to support the provision of beneficial ownership information as required by the Companies Act and establish a public beneficial ownership registry by April 2024.

In December 2024, the government has to publish a report on a designated website on progress in increasing the proportion of competitive tendered procurement contracts in the 10 agencies determined to have the lowest level of competitive tenders in 2022.    

It is compelled to implement the SOE reform policy, ensuring that the holding company (HoCo) and the advisory committee comprise skilled, independent, and ethical staff.

The IMF has directed to abolish or suspend application of the Strategic Development Projects Act until promulgate of an explicit and transparent process for evaluation of proposals and costing of investment promotion conditions.

Tax legislation will have to be amended to eliminate or restrict ministerial authority to introduce tax changes without prior parliamentary approval and ensure that such changes do not generate revenue losses.

It has to institute short-term anti-corruption measures within each revenue department to strengthen internal oversight and sanctioning processes and linkages with CIABOC and related criminal investigation and enforcement processes by December 2023 and issue a public report on steps taken and results obtained by December 2024.

A Cabinet policy paper has to be prepared by June 2024 on options for establishing new management arrangements for the Employee Provident Fund that terminates direct Central Bank management following a broad consultative process.  

Another recommendation is to revise legislation, regulations, and process relating to financial sector oversight in the banking sector, including strengthening corporate governance for banks with government ownership by improving the selection of executives and Board members   

By December 2024, the authorities will have to establish an on-line digital land registry, and publish, on a designated website, report on progress in implementing the published Plan for registering/titling all state land.

The IMF has suggested to establish and implement a plan to expand the resources and skills available to the Judicial Services Commission in order to enhance their ability to carry out their function and define potential options for modifying governance arrangements in the Justice sector to strengthen oversight, monitoring, and proper sector development. (BANDULA)