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Viewing cable 08COLOMBO238, SRI LANKA: FISCAL TRANSPARENCY REPORT

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Reference ID Created Released Classification Origin
08COLOMBO238 2008-03-10 11:49 2011-08-25 00:00 UNCLASSIFIED Embassy Colombo
VZCZCXRO0212
RR RUEHBI RUEHLMC
DE RUEHLM #0238 0701149
ZNR UUUUU ZZH
R 101149Z MAR 08
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC 7792
INFO RUEHKA/AMEMBASSY DHAKA 0761
RUEHIL/AMEMBASSY ISLAMABAD 7749
RUEHKT/AMEMBASSY KATHMANDU 5935
RUEHNE/AMEMBASSY NEW DELHI 1877
RUEHKP/AMCONSUL KARACHI 2332
RUEHCG/AMCONSUL CHENNAI 8364
RUEHBI/AMCONSUL MUMBAI 5843
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION
UNCLAS COLOMBO 000238 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EEB/IFD/OMA, SCA/RA, AND SCA/INS 
 
E.O. 12958: N/A 
TAGS: EAID ECON PGOV PREL CE
 
SUBJECT: SRI LANKA: FISCAL TRANSPARENCY REPORT 
 
REF: SECSTATE 16737 
 
1. (U) The following is the text of Embassy Colombo's fiscal 
transparency report for Sri Lanka. 
 
2. (SBU) Begin text: 
 
Sri Lanka has achieved a substantial degree of fiscal transparency 
in areas such as legal and administrative framework, compilation and 
reporting of fiscal accounts for the central government, and 
explicit separate accounts for the public corporations.  Sri Lanka's 
budget is made public through a publication.  The President's budget 
speech and a summary of revenue and expenditure estimates are 
published on the internet.  There is a 12 month time lag to release 
actual detailed budget data for a given year.  The budgets are 
prepared on a medium term budget framework.  Budget documents 
contain all central government revenue and expenditure.  Details of 
expenditure on military hardware are not provided in budget 
documents available to the public.  The government's budget 
documents do not contain accounts of public corporations or of 
provincial and local governments.  Public corporations publish 
separate accounts. 
 
The government's budget transparency has been enhanced by the Fiscal 
Management (Responsibility) Act, passed in 2003.  The Act lays out 
clear obligations for fiscal control, budget preparation, 
monitoring, reporting and parliamentary review with explicit medium 
term targets.  While fiscal targets contained in the FMRA have not 
been achieved to date, reporting has improved.  As required by the 
FMRA, the government publishes a fiscal strategy statement, a 
budget, an economic and fiscal position report, a mid-year fiscal 
position report and a final budget position report.  These reports 
are presented to parliament and published on the internet. 
 
The government has backtracked recently on previous measures to 
improve transparency and the fiscal oversight role of parliament. 
Beginning in 2003, the government has allocated increasingly large 
sums to a special Finance Ministry account.  The government has used 
this account to pay for expenses in various ministries as they arise 
throughout the year, by transferring funds on a case-by-case basis. 
Some of these payments are described in the "Budget, Economic and 
Fiscal Position Report," but many more are not detailed at all.  The 
Supreme Court in 2007 instructed the government to more fully report 
the use of these funds to Parliament as required by the Fiscal 
Management (Responsibility) Act. 
 
To achieve full transparency, additional reforms are needed.  These 
include provision of data on accounts payable and commitments, and 
publication of intra-year data in a timely manner.  Consolidated 
general government accounts need to be prepared and transactions 
between government and public enterprises further clarified. 
Transparency could be enhanced by strengthening the audit process. 
 
The government has been working with donor agencies to improve the 
budget process.  The World Bank is considering a $32 million loan 
for Public Financial Management and Statistical Institution 
Building.  This project will build technical capacity to improve 
public financial management.  The Asian Development Bank has 
assisted the government with a fiscal management reform program 
during 2005-2008.  The program aimed to support fiscal consolidation 
through improving public resource and expenditure management 
systems, fiscal discipline and supporting fiscal decentralization. 
ADB's standby loan list for 2008 includes a second Fiscal Management 
Program to further enhance expenditure management, internal auditor 
and service delivery. 
 
End text. 
BLAKE