• August 29, 2023

Public Debt Management… Finance Must Up Its Game

Public Debt Management…  Finance Must Up Its Game
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The Public Debt Management Division, Ministry of Finance, to date is unable to secure the new system (Meridian System) which is expected to address the limitation of the existing system.

Investigation carried out by FORUMNEWS-SL are that the database managed by the Public Debt Management Division Act of 2011 was unable to meet its core mandate of keeping timely, comprehensive and accurate records of outstanding government debts guarantees and lending in an appropriate manner.

Over the past five years, domestic arrears database maintained in excel spreadsheet disclosed that the database submitted was not fully maintained to provide complete public debt management information in line with the Public Financial Management Regulation, 2018 which provides for Public Debt Management Division to have a consolidated database to include the a copy of loan or grant agreement, an updated disbursement schedule from the donor for the subsequent three years.

Ironically, the amount of actual disbursements form donor for every quarter was not in the database submitted to the country’s supreme audit institution.

The spreadsheet in question was not secured with a password to protect the data from unauthorised changes.

Indisputable sources have it that until 2021, the country’s public debt management division was using script less security and settlement system to manage the external public debt that is unable to produce reports.

This important division at the Ministry of Finance was also in gross violation of section 24 (r) of the Public Debt Management Act of 2011 which has to do with verification for payment of domestic debt.

The Act requires the division to comply, verify and report all government domestic arrears and sign a strategy for the settlement of those arrears.

Inside sources at the Ministry of Finance revealed that out of the review of 265 samples of payment vouchers on the payments of public debt, the Audit Service in the Performance Audit Report on the handling and management of the country’s public debt observed only 34 payment vouchers for domestic arrears totalling OLe 64,027,894,366 were supplied without verification reports or minutes from the division.

The habit of non-verification of domestic debts before payments by the division might create room for over payments, incorrect data or leads to the creation of fictitious suppliers within the system.

In fact, it sound habitual for the division to be embarking on improper reconciliation between the Accountant General’s Department and the Public Debt Management Division in respect of public debt figures captured by the Accountant General’s Department and how they are reconciled with figures recorded in the Public Debt Management Division database.

This has over the years created room for duplicating or the issuance of over payments in respect to public debt.

As wrong posting of arrear payments in the database becomes monotonous in contradicting section 24(m) of the Public Debt Management Act, 2011, which makes it mandatory for the division to keep timely, comprehensive and accurate records of outstanding government debts, guarantees and lending in an appropriate database.

Massive discrepancies existed between domestic arrears and also review payment vouchers of domestic arrears as payment transactions in the arrears database are not reflective of the actual details on the payment vouchers amounting to OLe284,936,400 made to suppliers.

It was later discovered that the said amount are rollover payment transactions processed by the Accountant General’s Department that are not qualified to be specified to be domestic arrears.

Incorrect posting of domestic debt continue to cause the inflation of public debt figures and therefore the wrong public debt often presented.

Another embarrassing and deliberate entering is the payments of allocations and grant as domestic debt to Ministries, Departments and Agencies, another contradiction of section 80 of the Public Financial Management Regulations 2018.

‘Any balance of a commitment ceiling that remains unused at the end of a quarter shall lapse at the end of the financial year’.

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