Opposition United National Party (UNP) legislator Harsha de Silva, an economist, said proposed changes to Sri Lanka's Fiscal Management (Responsibility) Act of 2003 will make it a 'fiscal irresponsibility' law.
The law required ruling administrations to run responsible budgets so that the debt as a percentage of gross domestic product, would fall to 60 percent by 2013.
But the deadline has now been extended to 2020. Interim targets have generally been observed in the breach so far.
Sri Lanka's debt to GDP ratio is a little over 80 percent of GDP, but less than the 100 percent of GDP level seen a decade ago when the law was enacted.
"This is an amendment to remove the word 'responsibility' and make it a Fiscal Management (Irresponsibility) Law," de Silva told reporters.
In another move, a limit on sovereign guarantees given for state or non-state entities to borrow from banks set at 4.5 percent of GDP will removed and raised to 7.5 percent.
"So what they are doing essentially is creating contingent liabilities," de Silva said.
"They are just playing with the accounting and creating greater difficulties for the people down the road."
De Silva said the budget deficit numbers were being understated with off-budget spending.
Up to the third quarter of 2012 about 3.8 percent of GDP or 289 billion rupees of guarantees had been issued by the Treasury, including a 23 billion rupee foreign loan of loss-making SriLankan Airlines.
Disclosures made under the fiscal responsibility law showed that 83 billion rupees in new guarantees or about 1.1 percent of GDP had been issued in the first three quarters of 2012 alone.
The budget deficit as a share of GDP is estimated to have fallen to 5.8 percent from 6.2 percent a year earlier.
The International Monetary Fund has also raised concerns regarding the growing sovereign guarantees, and the debt to GDP ratio which is hovering around 80 percent levels, though budget deficit numbers are seen to be falling.
It is not clear how the rating agencies would view the change to the law, which allows higher levels of sovereign guarantees and extends the correction period.
Sri Lanka has a bloated state sector to which tens of thousands of unemployable able bodied graduates educated at tax-payer expense are recruited each year.
State enterprises also make losses in the region of 2.0 percent of GDP which are financed with bank borrowings.
Critics say due to sustained propaganda by elected rulers who got control of the taxation and borrowing system with the end of colonial rule in 1948, citizens are not fully aware that all government spending and borrowing is actually borne by them.
Such ideas came to Asia from Western Europe where Mercantilism started to again masquerade as economics in the form of Keynesian dogma, state intervention, inflation currency depreciation and 'development economics' after the Second World War.