US embassy cable - 03COLOMBO747

UNCLAS SECTION 01 OF 03 COLOMBO 000747 
 
SIPDIS 
 
STATE FOR SA/INS 
 
STATE FOR EB/IFD/OIA 
 
E.O 12958:N/A 
TAGS: AA, AMGT, EAID, EFIN, EINV, EPET, ETRD, CE, ECPN 
SUBJECT: FY 2003 TRANSPARENCY AND ACCOUNTABILITY 
SURVEY - SRI LANKA 
 
REF: STATE 100283 
 
1.  Post response to reftel survey request follows. 
Post consulted IMF and WB rep offices in Colombo and 
Central Bank contacts in preparing this response. 
 
a. Does host government publish national budget in a 
timely manner? 
 
1 - Does not publish, or publishes with significant 
delay (three years or more) 
2 - Yes, with some delay (one year or more) 
3 - Yes, with minimum delay (under one year) 
 
ANSWER: 3 - Yes, with minimum delay (under one year) 
 
 
b.  Where subnational levels of government are 
significant, are their combined fiscal positions 
published? 
 
Yes/No. 
 
ANSWER: Not applicable (subnational levels of 
government are not generally significant.  Their 
accounts are published separately.) 
 
c.  In what form is national budget published? 
Government publication or newspaper?  Private media? 
Internet?  Other? Please indicate. 
 
ANSWER:  Government publication and summaries are in 
newspapers and on the internet. 
 
 
d.  Please rate the quality and comprehensiveness of 
fiscal data published. 
 
1 - No adequate system of budget reporting and 
monitoring and no adequate classification system. 
There are significant payments arrears, and actual 
expenditures often deviate significantly from amounts 
budgeted 
 
2 - Limited system of budget reporting and monitoring 
with limited classification system.  Some payments 
arrears and deviations between actual expenditures and 
amounts budgeted 
 
3 - Excellent system of budget reporting, monitoring 
and a consistent classification system.  No payments 
arrears and actual expenditures equal amounts budgeted 
 
ANSWER:  2 - Limited system of budget reporting and 
monitoring with limited classification system.  Some 
payments arrears and deviations between actual 
expenditures and amounts budgeted. 
 
e. List up to 5 key laws and/or regulations governing 
public disclosure of revenues and expenditures in the 
national budget, if applicable and such laws exist. 
 
ANSWER: 
Constitution Of The Democratic Socialist Republic Of 
Sri Lanka (1978) 
Finance Act (1971) 
Financial Regulations (1992) 
Annual Appropriations Act 
The Fiscal Management (Responsibility) Act, No 3(2003) 
 
f.  Assess adequacy of those laws and regulations 
establishing fiscal transparency and accountability 
requirements. 
 
1 - Wholly inadequate 
2 - Some recognition and legal foundation, if spotty 
3 - Detailed/comprehensive 
 
ANSWER:  2 - some recognition and legal foundation, if 
spotty 
 
g.  Assess extent to which laws and regulations on 
fiscal transparency and accountability are implemented 
and enforced. 
 
1 - Not enforced 
2 - Sporadically/unevenly enforced 
3 - Fully enforced 
 
ANSWER: 
2- Sporadically/unevenly enforced.  The new Finance 
(Management) Responsibility Act is only now becoming 
operational.) 
 
h.  How would distribution of tax powers and 
expenditure responsibilities of central government be 
described? 
1 - Unclear 
2 - Currently being clarified 
3 - Clear and supported by open and stable 
    intergovernmental transfer mechanisms 
 
ANSWER: 2-Currently being clarified. 
 
i.  Does a national audit body or equivalent 
organization, independent of the executive, provide 
reports for the legislature and the public on the 
financial integrity of government accounts? 
 
Yes/No 
 
ANSWER: Yes, but reports published with delay 
 
j.  How would the link between non-financial 
public/state-owned (e.g. extractive industries) 
enterprises and general government be described? 
 
1 - Poor with semi-independent spending/procurement 
    authority of non-financial public enterprises 
2 - Limited independence of spending/procurement 
3 - Clear control under central government budget 
process 
 
ANSWER: 2, but more accurately, between 2-3. 
Enterprises have high degree of independence but 
several are constrained by their partial reliance on 
budget resources.  Those resources are clearly defined 
under central government budget process. 
 
k.  Are privatization processes transparent and 
published? 
 
1 - No or limited 
2 - Moderately transparent 
3 - Fully transparent and comprehensively reported 
 
ANSWER: 2 - Moderately transparent 
 
l.  How would the reliability of budget revenue and 
expenditure estimates best be described? 
 
1 - Unreliable 
2 - Moderately reliable 
3 - Very reliable 
 
ANSWER: 2 - Moderately reliable 
 
m.  Please provide a short evaluative narrative of 
host government commitment to fiscal transparency and 
accountability (not to exceed two or three 
paragraphs). 
 
-- 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 and aggregate accounts for the 
public corporations.  This framework has been enhanced 
by a new Fiscal Responsibility (Management) Act.  The 
Act lays out clear obligations for budget preparation, 
monitoring and parliamentary review with explicit 
medium term targets. Success will depend on the 
effective implementation of this law. 
 
To achieve full transparency, additional reforms are 
needed.  These include the proposed multiyear program 
budget framework, 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 relations 
between government and public enterprises further 
clarified.  The government has moved recently to 
improve the oversight role of parliament and this 
could be enhanced by strengthening the audit process. 
 
N.  Please list U.S. government-sponsored programs and 
activities that promote accurate disclosure of 
revenues and expenditures in the national budgets of 
your host country. Please also summarize the results 
of those programs and activities (not to exceed two or 
three paragraphs). 
 
--U.S. Treasury will provide technical assistance to 
the Sri Lanka Ministry of Finance with an advisor in 
governmental budgeting for a one-year period from 
April, 2003.  The advisor will focus broadly on 
revising the budget process to become a management and 
policy implementation tool.  An advisor is also 
envisioned in the area of government Debt Management, 
and it is expected that his work will also result in 
greater accountability and transparency on the debt 
aspects of the budget. 
 
USAID has funded two Technical Assistance advisors who 
have counseled the government on overall economic 
strategy and reforms. This counsel, we believe, has 
influenced the recent moves toward greater openness. 
 
End Questionnaire. 
 
WILLS