Sri Lanka and Thailand agree to enhance public debt management capacity
July 27, Colombo (LNW): Sri Lanka plans to fully operationalize its Public Debt Management Office (PDMO) by January 2026, following its establishment in the fourth quarter of 2024 under the new Public Debt Management (PDM) Law.
Thailand and Sri Lanka’s Ministry of Finance signed a Record of Discussion (RoD) to launch a Capacity Building Program for officials associated with the upcoming PDMO.
This development was discussed at a recent Committee on Public Finance (COPF) meeting. The PDMO will operate within the Ministry of Finance, as outlined in the proposed PDM Bill, and is expected to be set up by Q4 2024 according to guidelines from the International Monetary Fund (IMF).
Deputy Secretary to the Treasury, A.K. Senavirathna, mentioned that the proposed PDM bill would introduce a Medium Term Debt Management Strategy (MTDMS) for parliamentary approval.
This strategy will guide the government’s future debt-raising activities and will be updated annually along with the budget over a five-year period, based on the fiscal rules in the proposed Public Financial Management Bill once it is enacted.
Central Bank Governor Nandalal Weerasinghe explained that the Minister of Finance, who will have exclusive authority to raise debt, along with the PDMO, will need to adhere to the Parliament-approved MTDMS.
Ajith Abeysekara, Director General of the External Resources Department, noted that the IMF initially wanted Sri Lanka to create an independent debt management authority.
However, due to Sri Lanka’s traditional democratic setup, establishing an independent authority was considered challenging, leading to the creation of the PDMO with operational autonomy within the Treasury under the Finance Minister.
To enhance Sri Lanka’s fiscal framework and public debt management capacity, the Neighbouring Countries Economic Development Cooperation Agency (NEDA) of Thailand and Sri Lanka’s Ministry of Finance signed a Record of Discussion (RoD) to launch a Capacity Building Program for officials associated with the upcoming PDMO.
This cooperation is a significant step towards efficient public debt management.
The agreement was signed following an invitation from the Department of External Resources of the Finance Ministry. A NEDA delegation, led by President Perames Vudthitornetiraks, met with Treasury Secretary Mahinda Siriwardana in Colombo.
This initiative is crucial as Sri Lanka aims to establish the PDMO by the end of the year to enhance its public debt management practices and ensure long-term fiscal sustainability.
Treasury Secretary Siriwardana noted the government’s fiscal and monetary policy initiatives that have significantly contributed to the country’s recovery from its recent economic crisis.
He emphasized the government’s commitment to preventing future economic crises and highlighted the longstanding cultural and religious ties between
Thailand and Sri Lanka, particularly through Theravada Buddhism. Siriwardana also expressed optimism about future development cooperation between the two countries.
NEDA President Perames Vudthitornetiraks praised the Sri Lankan government’s progress and affirmed NEDA’s readiness to share its expertise in public debt management.
