State fund restructuring will see inactive or ineffective statutory funds liquidated or merged as Sri Lanka tightens fiscal discipline and transparency.
Sri Lanka’s state fund restructuring programme will liquidate or merge several statutory funds that have drifted from their original purposes or failed to deliver expected results.
Deputy Minister of Finance and Planning Dr. Anil Jayantha said the Government is taking the step as part of a broader reform programme.
The objective is to streamline public financial management, strengthen fiscal discipline and improve the use of state resources.
Funds that no longer serve their intended purpose could either be wound up or merged with institutions that can perform their functions more effectively.
State Fund Restructuring Follows Committee Review
A special committee chaired by the Prime Minister’s Secretary examined the performance, financial viability and objectives of several statutory funds now in operation.
The committee also considered whether those funds continued to fulfil the purposes for which Parliament originally established them.
After an extensive review, the committee submitted a report recommending a series of liquidations and mergers.
Dr. Jayantha said the review found that some funds had moved significantly away from their original mandates over the years.
In some cases, authorities had used money from those funds for expenditure unrelated to their core statutory objectives.
The Government now plans to implement the restructuring process based on the committee’s findings.
Labour Welfare Fund Set for Liquidation
One of the first institutions affected is the Labour Welfare Fund under the Ministry of Labour.
The Government has already begun the process of liquidating the fund.
Parliament established it under the Labour Welfare Fund Act No. 12 of 1998.
Its original purpose was to provide welfare, employment security and assistance during emergencies and disasters for workers across the country.
However, investigation reports indicate that authorities later used substantial amounts from the fund for other projects.
These reportedly included spending crores of rupees on school bags and other equipment distributed to children.
Although such programmes were implemented as social welfare measures, the review found that they did not directly align with the legal purpose for which the fund was created.
That divergence has now become a central reason for the decision to wind it up.
Government Targets Fiscal Discipline and Transparency
The broader reform programme aims to improve transparency in the management of state revenue and expenditure.
It also seeks to reduce the fragmentation of public funds and direct government money towards more effective national priorities.
International financial institutions and local economic analysts have repeatedly warned that a large number of statutory institutions and specialised funds can make public expenditure harder to monitor.
Such fragmentation can also complicate financial audits and weaken accountability.
Through the state fund restructuring process, the Government expects to reduce unnecessary administrative costs and strengthen an integrated fiscal framework.
The longer-term objective is to move public finances towards a more unified Treasury-based system.
The Government believes that closing inactive funds, merging overlapping institutions and redirecting resources to clearly defined priorities will improve financial oversight.
The reform will therefore be judged not only by how many funds disappear, but by whether the money they once controlled can be managed more transparently and effectively.
