New Financial Management Act to control public finance soon

The Finance Ministry is now strictly managing the Treasury cash flow to meet the recurrent expenditure amidst signs of some stability not by improving the economy, but with several tax increases and subsidy cuts that have further curtailed demand.

On account of these new revenue generation measures and 6 per cent expenditure cuts of ministry budgets, the government is to introduce a Financial Management Act (FMA) aimed at managing public finance and expenditure, a senior Treasury official disclosed.

With the expected tax adjustments, the Government is expecting a total income of Rs. 173 billion, but for the essential recurrent expenditure alone it requires Rs. 196 billion, resulting in a deficit of Rs. 23 billion for the month of March .

State salaries cost Rs.87.4 billion; pensions and income supplements (Samurdhi programme) were Rs.29.5 billion while other expenses were Rs. 10.8 billion.

The amount needed to service debts in March is Rs. 508 billion. Debt service was Rs 377.6 billion for January 2023 which has to be covered with borrowings from Treasury bills, bonds and a Central Bank provisional advance of Rs.100 billion, he revealed.

He said that the relevant bill is being finalised with the aim of improving the responsible fiscal management process when dealing with public finances and to take substantial decisions based on efficient resource utilisation.

The FMA will strengthen transparent financial systems and effective performance management by giving freedom to officials to manage public finance efficiently and making them accountable for their responsible projects, he pointed out.

The new Act will provide provisions to introduce reforms and modernise the accounting and reporting standards and making public sector accountability as a mandatory requirement.

The new FMA is to be formulated in accordance with international standards in the implementation of national policies, strengthening physical sustainability and credibility, and providing an accurate and reliable perspective of the nation’s public finance, he added.