New Fiscal Regime forces major consolidation of state funds
Sri Lanka’s statutory and non-statutory funds being operated by various government institutions including ministries currently are to be absorbed into the consolidated fund before July 31 this year, a Finance Ministry circular revealed.
Some 210 such funds will be brought under the control of the Treasury while shutting down a further 13 public funds in accordance with the provisions of the newly enacted Public Financial Management Act No.44 of 2024, which mandates the closure of all such unlinked state resources.
The 13 funds listed to be closed are the National Botanical Garden Trust Fund, Judicial Infrastructure Maintenance Trust Fund, Road Maintenance Trust Fund, National Child Development Fund, Wild Life Trust Fund, Vehicle Emission Trust Fund, “Sisu Aruna” Scholarships Fund, “Mahindodaya” Scholarship Fund, “Sujatha Diyaani” Fund, Shipping Development Fund, Temporary Surplus Trust Fund, Self-Employment Revolving Fund, and Dedicated Economic Centres Maintenance Fund. Statutory funds are established by law for specific purposes while non-statutory funds are created by executive action or regulations rather than being explicitly mandated by law.
The aim of merging and bringing it under the Treasury is to streamline public finance management. The process involves winding up non-statutory funds by the stated deadline.
Those funds previously managed separately will now be part of the central government’s financial resources. This is part of a broader effort to streamline government finances and improve financial management, according to the Treasury.
A new system has been introduced to make changes on the scope, mandate and objectives of such funds to reflect the present day requirements under the direct and strict monitoring of the Treasury, a senior official told The Sunday Times Business.
All these funds will be made more efficient and transparent service providers, he said adding that it will raise the quality of the government’s fiscal policies.
A special committee appointed to look into the fund management has come to a conclusion that out of the total 210 funds reviewed, 105 funds have been identified as public funds, of which 10 funds have been identified as the highly impacted funds. Hence it requires further study to take policy decisions.
Based on the recommendations of the committee, 12 public funds have already been placed under the national budget department and it has identified that the continuation of 21 funds were not feasible to operate.
According to the Public Financial Management Act, any non-statutory fund should cease its operations from the date of coming into operation of the Act and will be dissolved within one year from such a date, and those funds should be remitted to the Consolidated Fund.
In the event of winding up a non-statutory fund, the whole process will have to be completed before July 31 or early August this year, the circular said.
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