A Fiscal Mandate for the Future
By The Frontpage Journal Editorial Board
In an era where fiscal responsibility is no longer optional but essential, governments around the world face mounting pressure to deliver more with less. Sri Lanka is no exception. As the nation grapples with the dual imperatives of economic recovery and long-term development, sustainable value creation through expenditure and cost management in the public sector has become a strategic priority. This is not just a matter of balancing books—it is about restoring public trust, improving service delivery, and setting a foundation for a resilient, equitable future.
The Shift Toward Sustainable Value Creation
Sustainable value creation in the government sector moves beyond short-term budget cuts or cost-saving exercises. It focuses on building long-term economic, social, and institutional value through strategic investment, efficient resource allocation, and transparent governance.
It demands a holistic approach, where spending decisions are aligned with national priorities, development goals, and the actual needs of citizens.
Governments must now look at expenditure not as a routine exercise in disbursement but as an opportunity to maximize public value. Every rupee spent must carry a purpose, a measurable outcome, and a traceable benefit. From infrastructure to healthcare and education,
sustainability must be embedded in fiscal policy decisions to ensure that public money creates lasting impact.
Restoring Fiscal Stability Through Reform
Sri Lanka’s recent economic crisis underscored the dangers of unchecked fiscal deficits, opaque budgeting practices, and politically motivated expenditure. The path to restoring fiscal stability begins with rethinking how the public sector plans, spends, and evaluates its money. This means addressing systemic inefficiencies, reducing unnecessary subsidies, and eliminating leakages in procurement and administration.
Fiscal stability cannot be restored by austerity alone. It requires reform that strengthens the fundamentals: a clear medium-term fiscal framework, improved debt transparency, targeted social protection, and a disciplined approach to capital expenditure. The emphasis must be on quality rather than quantity—ensuring that investments contribute to economic growth while safeguarding public welfare.
Modernizing Public Expenditure Management
Effective expenditure management lies at the heart of sustainable governance. Public institutions must adopt modern budgeting techniques, rigorous financial oversight, and performance-based evaluation systems. This involves not only cutting waste but reallocating resources toward high-impact areas such as climate resilience, education, digital infrastructure, and entrepreneurship.
One key strategy is Zero-Based Budgeting (ZBB), a method that compels departments to justify every line item from scratch each year, rather than basing allocations on historical spending. ZBB fosters accountability, eliminates complacency, and ensures that spending decisions reflect current priorities rather than legacy entitlements. While implementation requires strong institutional capacity and political will, the long-term gains in efficiency and discipline are undeniable.
Technology and Digitization; Catalysts for Accountability
Technology is redefining how governments can manage public expenditure. Digital tools—from e-procurement platforms to real-time financial dashboards—enable better planning, monitoring, and evaluation. They improve data accuracy, reduce manual errors, and deter corruption by enhancing traceability.
Digitization also holds transformative potential for public service delivery. Automating repetitive tasks, digitizing citizen services, and integrating databases across agencies can significantly lower operational costs while improving responsiveness and transparency. Smart systems that flag anomalies in spending, generate predictive analytics, or audit programs in real time can become powerful tools in the government’s fiscal armoury.
However, digital transformation must be paired with institutional reform. Technology alone cannot fix broken systems—it must be accompanied by training, change management, and a commitment to data-driven decision-making.
A Culture of Accountability and Purpose
Sustainable public sector transformation hinges on more than systems and strategies. It requires a cultural shift. The traditional bureaucratic mindset that equates spending with activity must give way to a performance-driven ethos. Public officials must be empowered but also held accountable for delivering outcomes rather than merely
executing budgets.
This calls for new incentives, stronger leadership, and a recalibration of civil service values. Ministries and departments should be evaluated on their ability to deliver real results, be it improved healthcare access, cleaner cities, or better roads, not just on how much they spent or how many programs they launched.
Moreover, public participation must become a core part of the fiscal process. Citizens deserve to know where their money goes, what it achieves, and how they can hold institutions accountable. Transparent budgeting portals, open data initiatives, and regular fiscal reporting are not luxuries they are prerequisites for public trust and democratic legitimacy.
Toward a New Fiscal Ethic
Sri Lanka stands at a fiscal crossroads. To move forward, we must adopt a new ethic one where public spending is purposeful, measured, and transformative. This is not about reducing the size of government, but about increasing its effectiveness. It is not about austerity, but about sustainability.
The future of public sector value creation lies in embracing innovation, fostering accountability, and aligning spending with strategic national goals. Through modern tools like Zero-Based Budgeting, digitized expenditure management, and performance-based governance, Sri Lanka can not only stabilize its economy but rebuild public confidence in its institutions.
In a world of finite resources and growing expectations, sustainable value creation is no longer a choice for governments—it is a necessity. The time to act is now.
Building Capacity, Confidence, and Continuity in Government Spending.
As Sri Lanka continues to navigate its economic recovery and institutional reforms, the conversation around public expenditure must expand. Sustainable value creation in the government sector is not just a fiscal or technical exercise. It is a long-term commitment to build credible, capable, and citizen-centered governance. While zero-based budgeting, fiscal discipline, and digitisation form the core of modern expenditure management, several complementary strategies deserve urgent attention if the country is to institutionalise reform and prevent the recurrence of past mistakes.
One of the foremost challenges in sustaining value creation is the limited institutional capacity within public agencies. Financial management systems, though improving, remain fragmented, often operating in silos with outdated workflows. Strengthening capacity must begin with comprehensive training for public servants, especially in areas such as public financial management, results-based planning, project evaluation, and digital literacy. Investment in human capital is critical. Without a skilled and empowered public workforce, even the most advanced budgeting tools or reform policies risk failure at the point of implementation.
Alongside capacity-building, institutional continuity must be protected. Too often in Sri Lanka, policy frameworks and budgeting mechanisms are reset or abandoned with each political cycle. A long-term fiscal vision anchored in non-partisan national development priorities is essential. This requires legal and procedural reforms that insulate key aspects of public expenditure management from political disruption. Multi-year budgeting frameworks, stronger parliamentary oversight, and independent fiscal councils can provide the checks and
balances necessary to ensure continuity.
A further issue that needs closer attention is the role of public-private partnerships (PPPs) in sustainable expenditure. When structured carefully and transparently, PPPs can reduce the fiscal burden of infrastructure projects while leveraging private sector expertise and capital. However, Sri Lanka’s record with PPPs has been uneven, often marred by political interference, weak regulatory frameworks, and poor contract enforcement. A clear policy on value-for-money analysis, risk sharing, and accountability in PPPs will be crucial if this tool
is to contribute meaningfully to fiscal reform and sustainable value creation.
Equally important is the practice of spending reviews. While zero-based budgeting introduces a fresh start each fiscal cycle, periodic spending reviews allow the government to evaluate the relevance, efficiency, and impact of existing programs and subsidies. These reviews should not be limited to cutting costs but should also identify programs that deserve scaling up. Done transparently, they enhance public confidence and institutional learning. The findings of such reviews must be made public and followed by corrective action, creating a feedback loop that gradually improves governance outcomes.
Another underutilised tool in expenditure management is behavioural insight. Governments around the world are increasingly using behavioural economics to design cost-effective public services, reduce waste, and improve compliance. For example, simple changes in how utility bills are presented or how subsidies are communicated can lead to significant fiscal savings without reducing benefits. Sri Lanka’s government can adopt similar behavioural interventions, especially in sectors like health, agriculture, taxation, and welfare, where public interaction and trust are critical.
Environmental sustainability also belongs at the heart of expenditure reform. Green budgeting is gaining traction globally, and Sri Lanka has an opportunity to integrate environmental indicators into public financial decisions. This means evaluating the carbon footprint, resilience value, or ecosystem impact of public investments, not just their economic returns. A green budget framework would help the country align its spending with climate
targets, reduce future environmental costs, and attract green financing from international partners.
Finally, transparency must remain the backbone of all reform. It is not enough to modernize systems behind closed doors. Citizens must be able to see where money is spent, how decisions are made, and what outcomes are achieved. Fiscal transparency improves trust, reduces corruption, and fosters public participation in governance. Regular publication of budget execution reports, audit findings, and public service performance data will reinforce the social contract between the state and its people.
The path to sustainable value creation in the public sector is long, but it is necessary. It calls for a shift in how we think about government spending—from a narrow focus on inputs to a broader concern for outcomes, equity, and resilience. As Sri Lanka rebuilds, it must do so with a smarter state—one that is lean but not hollow, agile but not ad hoc, and above all, accountable to the people it serves. The cost of inaction is clear, but so too is the promise of reform. With vision, commitment, and consistency, sustainable public finance can become the
cornerstone of Sri Lanka’s future prosperity.
