VZCZCXRO4882
RR RUEHBI RUEHLMC
DE RUEHLM #0365 0901005
ZNR UUUUU ZZH
R 311005Z MAR 09
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC 9706
INFO RUEHKA/AMEMBASSY DHAKA 1503
RUEHIL/AMEMBASSY ISLAMABAD 8493
RUEHKT/AMEMBASSY KATHMANDU 6731
RUEHNE/AMEMBASSY NEW DELHI 2854
RUEHKP/AMCONSUL KARACHI 2475
RUEHCG/AMCONSUL CHENNAI 9143
RUEHBI/AMCONSUL MUMBAI 6464
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION

UNCLAS COLOMBO 000365 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EEB/IFD/OMA Julia Jacoby, SCA/RA, AND SCA/INS 
 
E.O 12958: N/A 
TAGS: EAID ECON PGOV PREL CE
SUBJECT: SRI LANKA: FISCAL TRANSPARENCY 
 
REF: (A) SECSTATE 028885 
(B) 08 COLOMBO 0238 
 
¶1. (U) The following is in response to ref A's request for 
information concerning Sri Lanka's compliance under Section 
7088(c)(1) of the Department of Stae, Foreign Operations, and 
Related Programs Appropriations Act (SFOAA), 2009 (Div. H, 
P.L.111-8).  Responses are keyed to ref A questions. 
 
¶2. (SBU) The central government of Sri Lanka is receiving FY 09 U.S. 
foreign assistance funds. 
 
Public Availability of 2009 Budget 
----------------------------------- 
¶3.  (SBU) Sri Lanka's budget -- with expenditure and income details 
-- is made publicly available for purchase from the government 
publication office.  The President's budget speech, as well as a 
summary of revenue and expenditure estimates, are published on the 
internet.  There is a twelve month lag time for the release of the 
actual detailed budget data for a given year.  The budget is 
prepared on a medium-term budget framework.  Budget documents 
contain all central government revenue and expenditure.  Details of 
expenditure on military hardware are not provided in budget 
documents available to the public.  The government's budget 
documents do not contain accounts of public corporations or of 
provincial and local governments.  Public corporations publish 
separate accounts. 
 
Post's assessment of the extent to which the publicly-available 
budget accurately reflects actual government incomes and 
expenditures 
--------------------------------------------- ---------- 
 
¶4. (SBU) The government's budget transparency has been enhanced by 
the Fiscal Management (Responsibility) Act (FMRA), passed in 2003. 
The Act lays out clear obligations for fiscal control, budget 
preparation, monitoring, reporting and parliamentary review with 
explicit medium term targets.  While fiscal targets contained in the 
FMRA have not been achieved to date, reporting has improved.  As 
required by the FMRA, the government publishes a fiscal strategy 
statement, a budget, an economic and fiscal position report, a 
mid-year fiscal position report and a final budget position report. 
These reports are presented to parliament and published on the 
internet. 
 
¶5. (SBU) Beginning in 2003, the government backtracked on previous 
measures to improve transparency and the fiscal oversight role of 
Parliament by allocating increasingly large sums to a special 
Finance Ministry account.  The government used this account to pay 
for expenses in various ministries as they arose throughout the year 
by transferring funds on a case-by-case basis.  Some of these 
payments have been described in the GSL's "Budget, Economic and 
Fiscal Position Report," but many more are not detailed at all.  In 
2008, the Supreme Court instructed the government to more fully 
report the use of these funds to Parliament as required by the FMRA. 
 Following this decision, the Appropriation Act was amended to 
require the Treasury to inform the Parliament within two months of 
any transfer of funds from the Finance Ministry account.  This law 
came into effect on January 1, 2009. 
 
¶6.  (SBU) To achieve full transparency, additional reforms are 
needed.  These include 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 
transactions between government and public enterprises further 
clarified.  Transparency could be enhanced by strengthening the 
audit process. 
 
BLAKE