Sri Lanka has launched the establishment of a Public Debt Management Office (PDMO), which aims to centralize and streamline the country’s debt management processes, including tracking obligations of state enterprises and subnational bodies, the Ministry of Finance announced. The office, which began operations on December 2, 2024, is expected to be fully functional by January 2026. It will take over functions currently handled by various agencies, such as the Central Bank of Sri Lanka, the Department of External Resources, and the Department of Treasury Operations.
The creation of the PDMO is grounded in the newly enacted Public Debt Management Act (PDMA), which provides the legal framework for this operationally independent office. The PDMO’s primary objective is to strengthen public debt management, improve accountability, enhance transparency, and implement efficient borrowing practices essential for long-term fiscal health and debt sustainability.
Key responsibilities of the PDMO include the management of government debt, the issuance and management of loan guarantees, overseeing on-lending operations, and recording and reporting public debt. Additionally, the office will ensure that state-owned enterprises (SOEs) and subnational entities coordinate their borrowing activities with the PDMO. They will need prior written approval from the Finance Minister for any public issue of government securities, raising foreign loans, and issuing guarantees.
SOEs will be required to submit all terms and conditions for planned borrowings to the PDMO, along with copies of executed debt contracts. Provincial Councils, Local Authorities, and SOEs must also report their outstanding debt at the end of each quarter to ensure a comprehensive and up-to-date record of the country’s financial obligations.
The PDMO will handle several critical activities, including the preparation and publication of the medium-term debt management strategy, annual borrowing plans, and government securities auction calendars. The office will also negotiate financial terms, manage domestic and external borrowings, and maintain relationships with financial markets to ensure continued access to capital.
In addition, the PDMO will coordinate debt operations related to cash flow management, execute debt-related liability management operations, and assess credit risks. It will also be responsible for servicing government debt in a timely manner and preparing debt service forecasts.
This move is part of Sri Lanka’s broader effort to address its fiscal challenges and improve the management of public finances. By centralizing debt management under the PDMO, the government aims to enhance the efficiency, transparency, and sustainability of its borrowing practices, which are vital for the country’s long-term economic stability.
