By The Pulseline News Desk
Sri Lanka’s debt management framework has come under renewed scrutiny following observations in the parliamentary Committee on Public Finances (COPF) report highlighting weaknesses in both institutional capacity and operational procedures within the Public Debt Management Office (PDMO). Policymakers and financial governance experts now argue that urgent reforms are needed to strengthen the country’s debt oversight mechanisms and prevent future fiscal vulnerabilities.
COPF has pointed to significant shortcomings in the existing debt management structure, particularly in relation to technical expertise, staffing, and procedural safeguards. According to the report, the current framework lacks the institutional depth required to effectively manage the increasingly complex nature of sovereign borrowing, restructuring negotiations, and debt repayment obligations.
At the center of the recommendations is the need to enhance the capacity of the PDMO, which plays a critical role in managing the government’s domestic and external debt portfolio. Analysts say the office requires highly specialised expertise in areas such as financial risk analysis, debt sustainability assessment, international capital markets, and restructuring negotiations – competencies that are difficult to retain under the present public sector salary structure.
Government officials and economic experts are now proposing the establishment of a separate professional cadre for the PDMO, with higher salary scales and performance-based incentives aimed at attracting and retaining skilled professionals. They argue that debt management today requires expertise comparable to that found in central banks, global financial institutions, and private financial markets.
“The management of sovereign debt is no longer an administrative function alone. It requires advanced financial, legal, and analytical skills,” a senior finance sector source said. “Without competitive remuneration, the government risks losing trained professionals to the private sector and international institutions.”
The COPF report also recommends a comprehensive review and modernisation of the government’s Financial Regulations (FR), many of which were designed decades ago under a very different fiscal environment. Observers note that current regulations do not adequately address the complexities of modern debt instruments, contingent liabilities, or the transparency standards expected by international lenders and rating agencies.
Reforming the Financial Regulations is expected to improve checks and balances in debt management, strengthen accountability, and ensure clearer oversight of borrowing and repayment processes. Financial governance advocates say stronger internal controls could help minimize the risks of procedural lapses, unauthorised commitments, and weak monitoring practices.
The recommendations come at a critical time for Sri Lanka as the country continues efforts to stabilise its economy following the sovereign debt crisis and ongoing restructuring process. International financial institutions have repeatedly emphasised the importance of institutional reform, transparency, and professionalized public financial management as part of long-term economic recovery.
Economists warn that unless the PDMO is strengthened structurally and operationally, Sri Lanka may continue to face challenges in maintaining investor confidence and ensuring sustainable debt management practices in the future.
The proposed reforms are likely to generate debate within the public sector, particularly regarding the introduction of higher salary structures for a specialised cadre. However, supporters argue that the long-term benefits of professional debt management, including lower borrowing costs, improved fiscal discipline, and reduced financial risk, far outweigh the additional expenditure.
With Sri Lanka still navigating a fragile economic recovery, the COPF findings have intensified calls for the government to treat debt management reform not merely as an administrative adjustment, but as a national economic priority.
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