IMF & WB Recommend Key Reforms for Sri Lanka’s Debt Management

COLOMBO (News 1st); A joint mission from the International Monetary Fund and the World Bank has proposed important reforms to improve Sri Lanka’s public debt management.

The mission, which visited Colombo in early 2023, identified several gaps in the country’s current system.

The recommendations include:

The mission recommended introducing a new public debt management law, which would establish the Debt Management Office and define its mandate. The new public debt management law would define the governance and accountability framework for the public debt management from Parliament, who would delegate to the Ministry of Finance the authority to borrow and issue guarantees on behalf of the state.

The mission considered two options for organizing the new Debt Management Office and recommended that it be made up of a small group of specialized professionals focused on public debt management functions.

The IMF and World Bank emphasized the need for a more unified and transparent approach to managing public debt. 

According to the IMF report, the authorities agreed with the mission's recommendations. As next steps, the authorities will begin drafting the PDM law and implement reforms that can be carried out ahead of the formal establishment of the new DMO.