‘Economic Transformation Bill ‘ and ‘Public Financial Management Bill’ to Parliament on May 22
Acting Finance Minister Shehan Semasinghe announced plans to introduce two significant bills to Parliament on May 22, aimed at bolstering the country’s economy.
These bills, the “Economic Transformation Bill” and the “Public Financial Management Bill,” are designed to enhance the management of public finances, thereby safeguarding against future economic downturns.
Minister Semasinghe made this announcement during a press conference at the Presidential Media Centre today, themed ‘Collective path to a stable country’.
Acting Finance Minister Shehan Semasinghe, further stated,
‘The government has scheduled the submission of two significant bills crucial for the country’s economy on May 22. One of these bills is the “Economic Transformation Law,” aimed at preventing future economic collapses. Notably, this legislation stems from the vision of President Ranil Wickremesinghe, rather than being proposed by the International Monetary Fund. The recent stabilization of the economy following previous downturns underscores the importance of preserving this stability going forward.
Additionally, it is necessary to maintain optimal levels of public financial management to avert future economic crises. The “Public Finance Management Bill” is set to be presented to Parliament on the same day, with a focus on enhancing accountability in managing public finances. This legislative initiative aligns with recommendations from a collaborative program with the International Monetary Fund and holds significant importance for the country’s future financial management.
It’s important to underscore the critical significance of both these bills for the country’s future. These drafts contain numerous technical intricacies aimed at bolstering confidence in the economy and maintaining the trajectory of the new economic direction implemented thus far.
Further elaborating on the Economic Transformation Bill, it holds paramount importance for the country’s economic growth. Despite experiencing economic contraction in the second and third quarters of 2023, a notable growth rate of 4.5% was achieved in the fourth quarter. Consequently, the benefits of this economic upturn have started permeating to the grassroots level within the country.
Furthermore, it is imperative to enhance the economic competitiveness of the nation and adapt the economy to confront global challenges while fostering international cooperation and growth. Additionally, this bill addresses necessary changes in various sectors.
Specifically, the legislation encompasses reforms essential for international trade, trade agreements, and climate change mitigation efforts.
The establishment of a new Economic Commission in Sri Lanka, aimed at attracting investments to enhance competitiveness, fostering a conducive environment for investors, expanding international trade, establishing the National Productivity Commission, and developing export-related institutions, is also outlined in this bill.
Recently, Parliament endorsed the decisions made, particularly regarding economic transformation. In 2022, the public debt ratio stood at 128%, a figure slated to be reduced to less than 95% by 2032.
Similarly, the fiscal requirement, which was 34.6% of the gross domestic product in 2022, aims to be lowered to below 13% by 2032.
Effective debt servicing is paramount, with efforts focused on establishing Sri Lanka as a debt-sustainable nation capable of meeting its obligations. The aim is to reduce the debt payment ratio from 9.4% in 2022 to below 4.5% by 2027.
A proposed bill will outline specific national goals and actions taken to address economic challenges, providing a roadmap for sustainable economic growth, debt management, agricultural modernization, import-export regulation, and economic governance.
Additionally, considerable attention has been given to the Public Finance Management Bill, aimed at identifying weaknesses in the current legislation and proposing a robust legal framework to meet future needs.
