Sri Lanka’s Fiscal Mgmt. Responsibility Act has no teeth: CB Chief

Dec 15, 2017 (LBO) – Sri Lanka is in the process of reviewing the Fiscal Management (Responsibility) Act as it does not have any teeth at the moment, the Central Bank Governor said. Speaking at the 10th International Research Conference, Governor Indrajit Coomaraswamy highlighted that there should be specific reasons to deviate from fiscal targets. “I don’t think anybody has paid any attention to that because there is no real sanction or real consequence for breaching those targets,” Coomaraswamy said. “Government is considering how they can give it some teeth by specifying reasons why these targets can be breached for instance a natural disaster or a severe economic recession,” “When you do deviate from the target it will be necessary to set out how one would come back within the target.” Sri Lanka is currently at 5.2 percent of GDP for fiscal deficit and 79 percent of GDP for public debt, even though the targets are 3 percent for deficit and 60 percent for debt. Governor Indrajit Coomaraswamy further added that the government needs to get on track if they are to meet these targets.