Finance Minister Ravi Karunanayake, Transport Minister Nimal Siripala de Silva, Finance State Minister Lakshman Yapa Abeywardena and Minister of City Planning and Water Supply Rauf Hakeem and Treasury Secretary Dr. R. H. S. Samaratunga
Pic by Kithsiri de Mel
By Chandeepa Wettasinghe
Most of Sri Lanka’s state-owned enterprises (SOEs) have stopped bleeding under the ‘good governance’ regime, after it took over two years ago, Sri Lanka’s Finance Minister Ravi Karunanayake said this week.
“There are 403 state-owned enterprises, of which 200 were making losses when we took over. The loss making entities are now below 50. That too should be reduced. The others are either making profits or breaking even,” Karunanayake said.
Speaking at the signing of Statements of Corporate Intents (SCIs) for 5 state-owned enterprises this week, he said most SOEs were capable of making profits, but that due to political interference, they were not making profits.
However, the ‘good governance’ regime is also more or less following this modus operandi by not allowing the Ceylon Electricity Board to charge market prices, which in turn requires injections from the Treasury to stay afloat. Karunanayake said the aim of lower electricity rates is to protect the consumer.
SOE reforms are crucial for continued balance of payments support from the International Monetary Fund through a US$ 1.5 billion Extended Fund Facility.
Under the previous regime, SOEs were said to have undertaken debt exceeding Rs.1.1 trillion, or 10 percent of gross domestic product (GDP), without including such debt in the national accounts, where national debt is measured at around 75 percent of GDP.
Treasury Secretary Dr. R. H. S. Samaratunga noted that most SOEs forget that they are public institutions running on public finances.
“Most of the capital and investments in state-owned enterprises are funds taken from the public as tax. The management has to remember this, but unfortunately many in the management of state-owned enterprises have forgotten about this,” he said.
He noted that about 95 percent of the requests coming from SOEs are for further funding allocations, without taking into consideration that they are spending public money.
He further added that around 15-20 loss making SOEs have not made payments towards the Employees’ Provident Fund and the Employees’ Trust Fund.
“EPF and ETF payments haven’t been made by 15-20 state-owned enterprises for the past 10-15 years. These payments are taken from the employees’ salaries and from the government, but the payments haven’t been made to the Central Bank on a timely manner.
These 15-20 state-owned enterprises have made a loss of Rs.16 billion in 5 years,” he said. Transport Minister Nimal Siripala de Silva said that the Sri Lanka Transport Board is one of these SOEs, which had Rs.12 billion in outstanding EPF/ETF payments, of which Rs.8 billion has been paid “somehow” over the past couple of years. Dr. Samaratunga said the statements of corporate intent will be also signed with other SOEs in order to improve their performances.
“We hope at least the laws would be followed in a timely manner,” he said.