A joint mission from the International Monetary Fund (IMF) and the World Bank has recommended significant reforms to improve Sri Lanka’s public debt management.
The mission, which visited Colombo in early 2023, identified several weaknesses in the country’s current debt management system. In response, the mission proposed a series of important recommendations:
- Introduction of a New Public Debt Management Law
The mission suggested the introduction of a new public debt management law, which would establish a dedicated Debt Management Office (DMO) and clearly define its mandate. This law would outline a governance and accountability framework for managing public debt, with Parliament delegating authority to the Ministry of Finance to borrow funds and issue guarantees on behalf of the state. - Specialized Team for the Debt Management Office
The mission reviewed two potential structures for the new Debt Management Office and recommended that it consist of a small, specialized group of professionals focused solely on public debt management. - Unified and Transparent Debt Management
Both the IMF and World Bank emphasized the importance of a more unified and transparent approach to public debt management.
According to the IMF report, Sri Lankan authorities have agreed with the mission’s recommendations. As a next step, the authorities will begin drafting the public debt management law and implement preliminary reforms ahead of the formal establishment of the new DMO.
