In 2022, Sri Lanka defaulted on its debt for the first time in our history. For ordinary people, this was not just a financial headline. It meant higher prices, lost jobs, business uncertainty and a weaker economy. Four years later, there is an encouraging sign of progress. The Institute of International Finance’s latest report has ranked Sri Lanka fourth among the world’s largest improvers in debt transparency.
SEE ITEM Entitled“From Default to Renewed Investor Confidence : Advocata Championing Reforms That Transcend Generations”
One important contributor to this progress is the establishment of the Public Debt Management Office (PDMO), a reform Advocata consistently called for following the debt crisis. Prior to this reform, responsibility for government borrowing was divided among several institutions. There was no single office looking at the full picture: how much Sri Lanka had borrowed, at what interest rates, in which currencies and when the debt had to be repaid.The Public Debt Management Act No. 33 of 2024 created the PDMO, a dedicated institution to bring these responsibilities together.
Advocata supported the establishment of the PDMO for three fundamental reasons.
First, government debt management and monetary policy should be clearly separated. The Central Bank (CBSL) must focus on protecting price stability, while a specialised office manages government borrowing.
Second, debt management requires specialised professionals who understand international markets, interest-rate risks and currency risks. It cannot be handled only through temporary transfers from other government institutions.
Third, citizens and investors need transparency. Sri Lanka must clearly report not only government debt, but also the risks created by State-Owned Enterprises and other public liabilities.
The creation of the Public Debt Management Office is a major step forward. But passing a law is only the beginning. The success of the PDMO will depend on its independence, specialised expertise and institutional capacity needed to manage an increasingly complex public debt portfolio, and uncompromised public accountability. Without these, even a good, commendable law will remain confined to paper.
This is precisely why Advocata’s work does not cease when legislation is passed. We continue to study implementation, engage policymakers, explain reforms to the public, evaluate and speak up when institutions deviate from their sole purpose.
Real, effective reform is not another gazette notification that can be issued today and reversed tomorrow. They change institutions and protect future generations from repeating grave mistakes of the past.
READERS, your support allows Advocata to conduct independent research necessary to sustain the impact of such reforms, communicate complex yet necessary findings in simple language, and advocate to ensure that reforms are carried through to completion.
If you believe Sri Lanka should never again endure a crisis like the one we experienced in 2022, we invite you to support Advocata.
Your contribution is an investment in better institutions, better policies and thereby a more prosperous Sri Lanka. It is an investment to secure the future of your sons and daughters.
