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Supreme Court flags constitutional conflicts in two economic reform bills 

Supreme Court flags constitutional conflicts in two economic reform bills 

Sri Lanka’s attempt of enduring a legislative transformation by introducing a series of new laws and amending prevailing ones taken embroiled in legal tangle following the Supremecourt determination on two bills related to economic and fiscal reforms  

Speaker Mahinda Yapa Abeywardena yesterday announced the Supreme Court’s determination on the Economic Transformation Bill in Parliament, revealing that the apex court found several clauses in the proposed bill inconsistent with the Constitution.

Under Article 121(1) of the Constitution, the Supreme Court reviewed the Bill and proposed several amendments to align it with constitutional principles.

 Key recommendations include deleting certain clauses, empowering the Economic Commission, clarifying qualifications and procedures, and removing inconsistencies with the Constitution to safeguard its integrity.

Pending these amendments, the Supreme Court believes the Bill can pass with a simple majority while upholding constitutional integrity.

President Ranil Wickremesinghe has declared a pivotal move towards economic stability with the introduction of the Economic Transformation Bill.

 Emphasising the bipartisan nature of this initiative, he underscored the necessity for any future Government to uphold this agreement to effectively rejuvenate the national economy

In the second determination against the government, the Supreme Court yesterday held that Clauses 32(3) and 32(4) of the Public Financial Management Bill are unconstitutional, and must only be passed by a Special Majority of Parliament and be approved by the people at a referendum. 

The proposed Public Financial Management law in Sri Lanka aims to enhance fiscal discipline by setting a 13 percent primary spending limit of GDP and repealing the breached Fiscal Management Responsibility Act. 

This landmark legislation, designed to provide a framework for future fiscal management, includes a 2 percent budget reserve and provisions for exceeding the spending limit under specific circumstances such as national emergencies. 

Transparency International Sri Lanka (TISL) challenged the Bill in the Supreme Court on the basis that Clause 32 seriously weakens the controls on public procurement, thereby increasing corruption risk and weakening the level playing field.

The Court held that Clause 32 (3), which allowed the Minister of Finance to exempt State Owned Enterprises (SOEs) from compliance with the procurement guidelines, and Clause 32 (4), which allowed Provincial Councils to adopt their own guidelines, violate Articles 3 and 12(1) of the Constitution. 

The Court proposed that Clause 32(3) to be amended to: “The National Procurement Commission may, if it deems necessary, formulate and publish in the Gazette specific guidelines for State-Owned Enterprises,” in which case the said inconsistency shall cease.

The Court proposed Clause 32(4) to be amended as “The National Procurement Commission may, if it deems necessary, formulate and publish in the Gazette specific guidelines for Provincial Councils.”

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