The Government has recently issued a series of best practices to all ministries with a view to rationalizing the prevailing mechanisms on engaging with Investors, Lending Agencies, Foreign Organizations and Missions.
Issuing the Circular No: PS/SP/SB/Circular/OE/ZO19 dated December 19, 2019 the directives have been issued by the Secretary to the President to all Secretaries of Ministries.
The Circular said, “It has been observed that Line Ministries, Provincial Councils, Government Departments.
Regulatory Agencies, Promotional Institutions, Statutory Agencies, State Corporations and other Government and Semi Government agencies continue to engage with investors, lending agencies, foreign organizations and missions to discuss various financing programs, borrowing arrangements, credit lines and other similar types of instruments and even proceed beyond by entering into various Memoranda of Understanding (MOUs) and Agreements, without following due process envisaged in the related governing framework, It has also been noted that many such transactions are done without the prior knowledge or concurrence of the Ministries associated with external relations, relevant Treasury Departments and the Central Bank of Sri Lanka.
Attention has also been drawn to the fact that many bilateral and multilateral agreements and MOUs entered into in the past are poorly formulated with no proper needs assessment or sufficient preparatory work carried out, leading to multifaceted implementation difficulties including legal obstacles. This has given rise to credibility gaps, misunderstandings among parties, legal disputes, reputational damage and even alleged irregular practices.”
“Furthermore, attention has been drawn to high transaction costs in project management, over reliance on multiple consultancies having to spend extensive sums of money as part of project costs, adoption of lender specific procurement practices instead of using the National Procurement process, maintenance of separate project offices instead of deploying manpower resources in the Government particularly in relation to smaller projects, hiring of buildings, vehicles and logistic support instead of using available resources etc. that have in turn adversely affected prudent public financial management and accountability.” it furthered.
The Circular also said that “It should also be noted that any Government spending programme, including projects, require the approval of the Cabinet of Ministers to commence as well as budgetary allocation as approved by Parliament to enable spending, audit clearance etc. once the project enters the budget cycle. In this backdrop, attention is drawn to the Government Policy Statement which is very explicit in terms of its commitment to quality governance with a view to establishing a credible Government service delivery mechanism.”
Accordingly, all ministries have been instructed to strictly adhere to the best practices issued by the government concerning making new commitments or entering into MOUs or agreements with foreign governments and organizations, investment proposals, financing proposals or bilateral or multilateral funding arrangements on public investment projects, Investment Proposals, Financing Proposals, Foreign financing, Review and monitoring of project implementation, Continuation of existing projects, Project procurement and so on.
The Circular has directed that all ministries, with immediate effect, should refrain from making any new commitments and from entering into any MOUs or Agreements with foreign Governments and organizations.
It said, “Please note that such steps are the responsibility of the Ministry of Foreign Relations. Any clarifications as may be required, should be referred to the Ministry of Foreign Relations which will designate one of its officers who would directly interface with line ministries, provincial councils and such other entities, as may be necessary. It furthered that “With immediate effect, refrain from dealing with investment proposals, financing proposals or bilateral or multilateral funding arrangements on public investment projects either in the form of grant aid or foreign loans These are the responsibilities of the Ministry of Finance, Economy and Policy Development and the Central Bank of Sri Lanka. It also directs to enforce Public Contracts Act No. 3 of 1987 provided for the registration of public contractors and persons who tender or enter into public contracts with any public body to ensure that any agent or sponsor fully discloses his particulars, tax details, credentials and also his service fee and how such amounts are paid and by whom.
Directives have also been given to collate an exhaustive list of signed as well as pending MOUS and Agreements and avail the same to the Ministry of Foreign Relations seeking guidance and advice on how to set about, so that a streamlined approach could be adopted while suitably dealing with situations including delays etc.
Concerning the requirement for prior approval, the Circular directs ministries to refrain from entering into any MOUs or Agreements without following the process in this Circular or without obtaining prior approval from Hon. Attorney General and the Cabinet of Ministers.
Concerning Investment Proposals, the Circular directs the ministries to refer all investment proposals of prospective investors to the “Front Office Desk” being set up at the Board of Investment (BOl) dedicated and authorized to receive all such proposals.
Concerning Financing Proposals the Circular “advise all bilateral and multilateral lending agencies, project financiers and their agents that the focal point in relation to all their financing proposals is the General Treasury which will also set up “Front Desk Office’ to give the best guidance and advice on such matters.”
Best practices concerning Foreign financing and Liaison with lending agencies at project formulation stage were also issued via the Circular.
All review meetings concerning projects must be held on a monthly basis with the participation of the relevant State Secretary and senior staff responsible for implementation, with a view to resolving operational issues.
“Separate operational meetings should be held as and when required, in respect of projects and programmes supported by bilateral and multilateral funding agencies so as to ensure that coordinated efforts are constantly made to ensure meaningful and effective public expenditure management.” it furthered.
“As the Government will be working on a Vote on Account from January 2020 until the first Annual Budget is approved by the Parliament, ministries and spending agencies are permitted to continue ongoing work, and collective effort by all ministries must be directed towards completing ongoing activities in a cost effective manner to provide maximum services to the people, The Presidential Secretariat has been restructured to carry out the executive functions of the Constitution and perform the constitutional leadership entrusted upon His Excellency the President in consultation with the Hon. Prime Minister. The new organizational framework of the Office of the President provides line ministry secretaries, state secretaries and heads of departments statutory agencies and state enterprises a direct access to Additional Secretaries to the President for any assistance required.” the Circular further said.
Unified National Procurement System to be introduced
The government is to soon introduce a unified National Procurement System to the country, it was revealed yesterday.
Accordingly, the government is to appoint a new committee to formulate new procurement guidelines to be applicable to all new projects. All Secretaries have been advised to fast track existing work and conclude at the earliest, to be able to migrate to a new system.
Issuing the Circular No: PS/SP/SB/Circular/OE/ZO19 dated December 19, 2019 the government observed that it is presently “rationalizing and harmonizing the Procurement practices aiming to introduce a unified National Procurement System that will be applicable to all public investment activities, based on international best practices.
A new committee is to be appointed shortly to formulate new guidelines to be applicable to new projects and all Secretaries are advised to fast track existing work and conclude at the earliest, to be able to migrate to a new system.”
(Source: Daily News – By Amali Mallawaarachchi)