Salary disparities pose recruitment challenge for newly formed Public Debt Office

Sri Lanka’s newly established Public Debt Management Office (PDMO), a critical institution for managing the nation’s finances, is facing significant hurdles in attracting and retaining skilled professionals due to uncompetitive government salary structures, key figures highlighted this week.

The PDMO, which is set to commence full operations by December this year, comes under the purview of the Finance Ministry. It is tasked with consolidating functions previously handled by the Central Bank’s Public Debt Department and several other Treasury departments. 

However, experts warn that the relatively low salaries offered by the ministry compared to the Central Bank and the private sector could undermine its effectiveness.

The challenge was brought into sharp focus at a panel discussion in Colombo organised by the Association of Primary Dealers (APD).

Speaking at the event, President’s Counsel Harsha Fernando pointed directly to the salary disparity as a major obstacle. 

“Certainly, the office will struggle to attract and retain talent because if you look at simple salary structures, the Central Bank offers a much better package than an average government package,” he stated. 

“If you take a young, experienced person, he would rather work for the private sector because it offers a better package than any government office, including the PDMO.”

The PDMO was established under the Public Debt Management Act No. 33 of 2024, enacted last November. Its Director General, Udeni Udugahapattuwa, acknowledged the steep challenges ahead.

“With the establishment of the Public Debt Management Office, we are given a lot of challenges because we are going to take over many functions that were scattered across several government entities,” Udugahapattuwa explained. She confirmed that the office has already begun absorbing some of these responsibilities.

To address the skills gap, the PDMO is collaborating closely with the Central Bank. “We have already made arrangements with the Public Debt Department of the Central Bank to give the required on-the-job training for our staff, and they have already completed it,” she said, adding that her staff remains keen for further training.

Udugahapattuwa outlined a clear timeline for the transition, with a testing period scheduled to begin in September before a full operational launch in December. 

“We have a transition period until May next year,” she noted. “The Central Bank Public Debt Department will be assisting us during this transition period, and we will also be utilising the Central Bank’s software system until we procure our own.”

Recruitment is ongoing, with an initial team transferred from dedicated young officials within the Finance Ministry. Despite the hurdles, Udugahapattuwa expressed commitment to the task, noting that some of the required expertise is “completely new to the country.”

The stakes are high, as the PDMO is responsible for implementing the country’s Medium-Term Debt Management Strategy and paving the way for Sri Lanka to re-access international capital markets, a goal the IMF has indicated could be possible by 2027.

N.D.Y.C. Weerasinghe, the Central Bank’s Superintendent of Public Debt, assured stakeholders of a smooth handover. He confirmed that while front and middle-office functions such as debt issuance and analysis will move to the PDMO, the Central Bank will retain its back-office role in maintaining the Central Depository System for the foreseeable future.

“At the beginning, the Central Bank will be providing the fullest support, and of course, it will be providing systems as well for the new debt manager to operate,” Weerasinghe said, emphasising that the existing auction systems will continue initially to ensure market stability.

(NF)