President Dr. Mohamed Muizzu has ratified the National Fiscal Responsibility Bill. This bill was passed by parliament on November 27, 2024.
The government proposed the National Fiscal Responsibility Bill to establish a comprehensive framework for implementing feasible fiscal standards. The primary objective of the law is to ensure all state fiscal operations are sustainable, transparent, and accountable, fostering fiscal discipline such that it aligns with legal and regulatory obligations.
Under the new law, the government is permitted to borrow from the Central Bank to manage cash flow, provided such borrowing does not exceed 2.5% of the average revenue collected over the preceding three years. Additionally, the law mandates the Minister of Finance to formulate and submit several key documents to the parliament, including, a Fiscal Responsibility Charter, Fiscal Strategy Statement, Budget Statement, and a Risk Statement. Moreover, the first Fiscal Responsibility Charter, formulated under this new law, must be published in the Government Gazette within six months of the law's ratification.
Furthermore, the Auditor General is tasked with preparing reports on the government's implementation of the law’s provisions, which will be presented to parliament. The parliament, in turn, is responsible for conducting a fiscal impact analysis, evaluating the government performance, and providing recommendations to government based on its findings.
Following the ratification, the National Fiscal Responsibility Bill has been published in the Government Gazette and will take effect six months from the date of ratification and publication. With the enactment of the new law, the current Fiscal Responsibility Act is nullified.