ECONOMYNEXT – Sri Lanka’s new government led by ruling National People’s Power (NPP) is in discussions with the International Monetary Fund (IMF) on the restructuring of state owned enterprises (SOE) and it will not opt for privatization as the first option, Cabinet Spokesman Nalinda Jayatissa said.
Soon after the election of President Anura Kumara Dissanayake, his interim government said it would not privatize state-owned national carrier SriLankan Airlines. Later, it said a decision would be taken after the November 14 parliamentary election.
It is not clear what will be done with SriLankan which also has a defaulted bond and other loans. The last administration was also planning the privatize several state ventures which were hit by procedural delays.
“The last government appointed a committee to look into restructuring which was only meant for selling the assets,” Jayatissa, also the Minister of Mass Media and Health told reporters on Tuesday (31) at the weekly post-cabinet media briefing.
“They were planning to sell by divesting from the government. Our government policy is different
“We have handed over these institutions to ministries to assess them and see how best we can use them to the country’s development,” he said.
“We don’t consider institution wise, we see where Sri Lanka Telecom stands in the country’s economy in the future, where SriLankan Airlines stands in the country’s tourism and economy. We consider all the institutions in that way. So, we are trying to manage these institutions with that vision.”
LOSS-MAKING INSTITUTIONS
The SOE restructuring is considered as important as debt restructuring, because most of the state institutions run by the government had been mismanaged and running at a loss with the tax payers had to bear the losses.
The previous government led by Ranil Wickremsinghe called bids for state-owned Hotel Developers Lanka Ltd, Canwill Holdings Pvt Ltd, Lanka Hospitals Corporation PLC, Sri Lanka Telecom PLC, Litro Gas Lanka Limited, Sri Lanka Insurance Corporation Life Ltd, and Sri Lanka Insurance Corporation General Ltd.
Cabinet spokesman said privatization will only be the second step, if the current move with regard to SOE fails.
“Let’s see how we can make these institutions productive without corruption in the government and institutions. Our first effort is to keep these institutions under the government and make them contribute to the country’s development. If that effort fails only we will have to consider the second step.”
The impact of state enterprises on public finances as well as state banks has been an issue that the IMF program has tried to address as particularly the debt of Ceylon Petroleum Corporation and Sri Lankan figured in the default restructuring.
“We are discussing with the IMF. Some of the concessions are being given while discussing with the IMF and within the existing (IMF) framework. IMF also has not put forward rigid conditions that can’t be changed,” Jayatissa said when asked if there is a pressure from the IMF for restructuring.
“If they (IMF) have the confidence on the country’s spending and revenue, we can change certain things. In fact we are considering how important these conditions and these institutions are for our country and benefits for people.”
“The IMF is on one side and the government is on the other side. We are discussing with the IMF aiming on the country’s goal with the people’s aspirations. They have been continuing the disbursement while we are explaining them the issues from the public point of view. We are carrying forward the discussion in a way it will give least pressure to the public.” (Colombo/January 1/2025 – Update II)
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