ECONOMYNEXT – Sri Lanka’s cabinet has decided to revive a state-owned enterprise known for decades of losses, and was one of the top three loss making agencies in the 2001 currency crisis that led to the first economic contraction in post independent history.
The cabinet of minister had decided to re-activate the Co-Operative Wholesale Establishment, a government statement said.
In 2024.09.02 the then cabinet had decided to liquidate the agency.
The is a “possibility to perform a decisive role” within the market objective of continuous supply of quality goods and services to the public under a reasonable price” and the cabinet had decided to reverse the liquidation decision.
The cabinet had approved the proposal by the Minister of Trade, Commerce, Food Security and Co-operative Development to recommence the business activities under a ‘feasible business plan.’
The CWE had lost 2,238 million rupees in 2019 and 990 million rupees in 2019 according to the last publicly available accounts.
By end 2019, the CWE had accumulated losses of 15,387 billion rupees, 6,217 billion rupees in short term borrowings and owed 4,929 million to tax payer through the Treasury.
By 2019 the agency’s net assets were negative. The losses in the ensuing five years is not publicly available.
It is not clear how much money tax payers will have to fork out to revive the CWE.
The proposal to revive the SOE from the Ministry of Commerce comes as Sri Lankans are paying high taxes to pay salaries of state workers.
Analysts say the CWE represents shortcoming of the current ‘revenue based fiscal consolidation’, where there is little check on spending and only taxing the people to support a large government.
Sri Lanka has a history of SOE being used to give jobs to supporters of various parties.
The agency was set up in 1949. The move comes despite indications that the government will not maintain state agencies at a cost to the people, simply because an agency was set up at one time.
The CWE was among key agencies that contributed to losses and borrowings of around 2 percent of gross domestic product in the 2001 economic along with the Ceylon Petroleum Corporation and Ceylon Electricity Board.
At the time the large losses came from CWE’s wheat operations. The wheat operations were sold to Prima under a stabilization program in 2001 but it has some buildings and real estate in Colombo.
A bond that was used to offset some of the after that crisis later became part of national debt. (Colombo/Mar26/2025)
