Independent agency to take over public debt management-CB governor

The Sri Lanka Government is to set up an operationally independent debt management agency (PDMA) to manage the public debt in the country shortly in the wake of ever increasing public borrowings.

The Central Bank would assist the Ministry of Finance in establishing the Debt Management Agency (PDMA) to improve public debt management and debt transparency, Central Bank governor Nandalal Weerasinghe told reporters on Wednesday.

Unveiling “monetary and financial sector policies for 2024 and beyond” at a media conference in Colombo, he noted that, the Public Debt Management Act is expected to be enacted by March 2024, leading to the establishment of the PDMA, which is expected to be operationalised by December 2024.

Following the completion of the domestic debt optimisation (DDO) programme in 2023, several initiatives are expected to be carried out in 2024, aimed at enhancing debt management and transparency, he added.

Importantly, facilitating the external debt restructuring process by engaging with the relevant stakeholders would continue to contribute to the restoration of debt sustainability.

An early resolution with external private creditors on comparable terms would also contribute to the rapid dissipation of market uncertainties, thereby serving to bring down risk premia associated with government securities leading to the desired downward shift of the yield curve, the governor said.  

Currently, public debt is managed by the Central Bank’s Public Debt Department, the Finance Ministry’s External Resources Department and Treasury Operation Department.

The PDMA will report to and be accountable to the Ministry of Finance but it has substantial operational autonomy with overall policy responsibility for debt management by devising medium-term debt strategies and annual borrowing plans.

It will be the sole authority to direct the implementation of annual borrowing plans, including taking decisions on auction cut-offs.

The PDMA will manage all domestic and international market-based financing decisions and participate in the evaluation of all debt, derivatives, and guarantees. (Bandula)