Finance Ministry announces setting up of Public Debt Management Office

Thursday, 19 December 2024 03:38 - - {{hitsCtrl.values.hits}}

The Finance Ministry yesterday said the Public Debt Management Office (PDMO) was established and commenced operationalisation on 2 December, following the enactment of the Public Debt Management Act No. 33 of 2024 (PDMA) on 18 June 2024, declared effective from 25 November 2024.

The PDMA provides the legal framework for the establishment of the operationally independent PDMO. It will be operational by January 2026.

“This strengthens and centralises the management of public debt, improves accountability and debt transparency, and ensures the implementation of efficient arid transparent borrowing practices, which are imperative for debt sustainability and the long-term fiscal health of the country,” the Finance Ministry said in a statement.

It said there shall be a Director-General appointed to the PDMO by the Cabinet of Ministers. The Director-General shall be the Head of the Office and be responsible for the overall operations of the Office. Key responsibilities of the PDMO include: management of the debt of the Government; issuance and management of loan guarantees; management of on-lending operations; and recording and reporting of public debt.

The PDMO will take over all the relevant functions from the Central Bank of Sri Lanka, the Department of External Resources, and the Department of Treasury Operations, and will centralise the country’s debt management operations in a holistic manner and be fully operational by January 2026.

Accordingly, the PDMO shall exercise and perform its powers and functions in line with the provisions of the PDMA.

These include:

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*Preparation and publication of the medium-term debt management strategy, the annual borrowing plan, and the auction calendars for the issuance of Government securities.

*Negotiation of financial terms and conditions and execution of domestic and external borrowings, other credit arrangements, and debt management activities of the Government.

*Maintenance of relationships for achieving and maintaining access to financial markets.

*Coordination of debt operations in relation to cash flow management.

*Preparation and execution of debt-related liability management operations.

*Assessment of the credit risk and advise on risk mitigation mechanisms of loan guarantees and on-lending operations.

*Recording, reporting, dissemination, and publication of public debt, loan guarantees, on-lending, suppliers’ credit, and finance leases.

*Servicing of the debt of the Government on a timely basis.

*Preparation of debt service forecasts.

All relevant parties should coordinate with the PDMO for obtaining prior written approval of the Minister-in-Charge of the subject of Finance for any public issue of debt securities, raising of funds denominated in foreign currency, and issuance of guarantees by a State-owned enterprise in compliance with Section 26 of the PDMA. Further, State-owned enterprises shall submit to the PDMO all terms and conditions for each of its planned borrowings and a copy of the executed debt contract.

Each provincial council, local authority, and State-owned enterprise shall submit to the PDMO a record of its outstanding debt not later than 45 days after the end of each quarter in compliance with Sections 27 and 28 of the PDMA.