Strengthening Parliament Critical for Credible Budgets

Abstract

Sri Lanka’s budgets show considerable variation between publicly declared budget allocations and actual expenditure on line items. This gap can create a credibility problem. There is a specific section in Sri Lankan laws that facilitates the credibility problem and impotence of parliament oversight over the budgeting process. This Insight explains how this law is increasingly exploited. It demonstrates how the existing system, which allows for the allocation for development activities under the head “National Budget Department” (which is a department under the Finance and Planning Ministry) to be transferred to cover expenses under any other ministry, undermines not only the credibility of the budgeting process but also the fiscal management and economic development of the country.