Proposed Public Financial Management Act set to come into effect with 2025 budget

The Sri Lankan government will introduce a new Public Financial Management Act equipped with binding fiscal rules, which is set to come into effect with the budget 2025.

The Sri Lankan government will introduce a new Public Financial Management Act equipped with binding fiscal rules, which is set to come into effect with the budget 2025.

President Ranil Wickremesinghe in his capacity as the Minister of Finance, Economic Stabilisation & National Policies on Monday (May 8) sought the approval of  Cabinet Ministers to initiate the necessary steps to introduce a new Public Financial Management Act to be implemented with the 2025 budget, and simultaneously to repeal the Financial Management (Responsibility) Act (FMRA) No. 3 of 2003.

The proposed Financial Management Act is set to include measures when the government could deviate from fiscal rules under extreme conditions in order to bring the public finances back to compliance.

“The Act provides for non-compliance with State’s financial rules only with the approval of parliament in extraordinary cases. However, the Act does not include provisions for deviating from those terms.

The Act does not specify the measures to be taken in the event that the set goals cannot be met in accordance with the provisions of the Act,” the Government Information Department said.

The proposed Financial Management Act is also a key condition of the International Monetary Fund’s Extended Fund Facility.