ECONOMYNEXT – Sri Lanka authorities has dedicated to proceed reforms to the Worldwide Financial Fund on state-owned enterprises (SOEs) together with settlement pf legacy money owed and limiting overseas borrowing, the most recent IMF doc confirmed.
Sri Lanka’s present authorities has opposed privatization transfer proposed by the earlier authorities, but it surely has agreed for restructuring, the doc confirmed. The federal government mentioned each state run Ceylon Petroleum Company (CPC) and Ceylon Electrical energy Board have already included a debt reimbursement portion of their pricing method already.
“We’ll press forward with structural reforms to enhance monetary viability of SOEs,” the federal government has informed the IMF in its Memorandum.
On the CPC, the federal government has mentioned a small margin within the gas pricing method is utilized to repay $251 million of the outdated monetary obligations.
“Of this quantity, $146 million stays to be repaid as of end-March 2025, and we are going to make sure that these repayments proceed.”
“We plan to settle CEB’s remaining legacy debt (incurred previous to 2023), estimated at about Rs.180 billion as of end-2024. Compensation of this debt is included within the electrical energy tariff calculation beginning in June 2025,” the federal government mentioned referring to Ceylon Electrical energy Board.
“We’re finalizing a medium-term strategic plan for Sri Lankan Airways (SLA), which can embrace plans to revive operational viability and resolve legacy money owed.”
Analysts say restructuring Sri Lanka’s state-owned enterprises (SOEs) has develop into extraordinarily tough with out IMF intervention attributable to entrenched political patronage, weak governance constructions, and resistance from highly effective labour unions.
Many SOEs function with power losses and inefficiencies, but successive governments have prevented reform out of worry of political backlash and social unrest.
These entities are sometimes overstaffed, mismanaged, and lack transparency, making them a big drain on public funds. With out the exterior strain and technical steering supplied by the IMF, there was little political will to implement unpopular however mandatory reforms reminiscent of downsizing, tariff changes, or privatization.
The IMF’s conditionalities underneath the Prolonged Fund Facility have introduced renewed urgency and construction to SOE reform efforts, tying monetary help to measurable progress and serving to overcome home inertia that has lengthy stalled significant change
Sri Lanka’s authorities additionally has promised to a couple measures to strengthen SOE governance and improve their monetary transparency together with clarifying the mandates of key SOEs via Statements of Company Intent and maintain their administration accountable for delivering passable outcomes knowledgeable by key efficiency indicators.
The federal government can also be planning to evaluate the framework for choosing SOE board members to make sure that they’re certified and unbiased in addition to to make sure that all 52 main SOEs publish their audited monetary statements by end-June of the next yr.
“We now have revealed 2023 audited statements of 45 SOEs. The remaining seven SOEs proceed to come across delays associated to the necessity to clear the backlog of monetary statements since 2020-22,” the federal government mentioned within the memorandum to the IMF.
“We’re drafting the brand new SOE regulation with help from the World Financial institution, which can incorporate many of those transparency and governance necessities together with an specific coverage on the administration of state monetary belongings and make sure that all officers and administrators of SOEs are appointed in a rigorous, clear, and merit-based course of.”
“We’ll make sure that this new regulation is in keeping with the PFM (Public Finance Administration) Act and that the federal government has full authority to train monetary oversight of SOEs. We plan to enact the SOE regulation by end-2025. We’ll seek the advice of with the IMF earlier than submitting the SOE regulation to Parliament.”
The federal government additionally promised the IMF of constant to strengthen the framework for SOE borrowing.
“We’ll proceed to make sure that new SOE borrowing is restricted to the financing of commercially viable actions, and that, apart from venture loans on-lent by the Treasury and short-term commerce financing, there will likely be no new borrowing in overseas foreign money (FX) for non-financial SOEs with lower than 20 p.c of revenues denominated in FX,” the federal government mentioned.
“Ensures on FX borrowing will stay allowed on distinctive foundation to facilitate IFI (Worldwide Financing Establishments) financing to SOEs underneath very strict circumstances.” (Colombo/July 11/2025)
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