Finance Ministry and Treasury view many SOEs as a ‘growth-hindering machine’

Mangala urges national debate on SriLankan Airlines' viability



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Signing of the tri-party Statement of Corporate Intent (2nd round) by the State Pharmaceutical Corporation officials at the Finance Ministry on Monday, headed by Finance Minister Mangala Samaraweera, Treasury Secretary R.H.S Samaratunge and State Minister of Mahaweli Development and Environment Ajith Mannapperuma.


BY SANATH NANAYAKKARE


Minister of Finance Mangala Samaraweera and Treasury and Finance Ministry Secretary R.H.S Samaratunge said on Monday that many loss making state owned enterprises (SOEs) eventually place their fiscal burden on the average citizens of the country by way of tax and that leads to retarding the development goals of the country as tax money is wasted on these SOEs for their survival.


They pointed out that people's hard-earned tax money is used to help the mere survival of these SOEs, without using the funds productively to achieve real economic growth outcomes.


SOEs have a substantial correlation to the national economy as it provides essential public services and goods. Fifty five key SOEs contributed almost 14% to the GDP in 2018, but the net loss to the government by key state-run companies recorded a colossal sum of Rs. 26 billion in the same year." Dr. Samaratinge said.


"Thirty seven SOEs recorded profit of Rs. 131 billion in 2018 whereas 16 SOEs in the same year recorded a net loss of about Rs. 157 billion. These statistics show that SOEs need to be anchored to profitability. SOEs need to be made commercially viable, thus reducing the burden on the average citizens while empowering these public sector companies to support the government's macroeconomic policies and national development goals. So, proper strategic operation of this sector is crucial. Today we are going to sign Statements of Corporate Intent (SCIs) by 10 SOEs which come under the purview of the Finance Ministry. We expect that after this Corporate Intent being embraced by these SOEs, they will be more market-oriented in the medium term building their own capacity to run as profitable ventures without seeking funds from the Treasury. That responsibility will ultimately lie on the relevant chairpersons, secretaries, director boards and employees of these SOEs", he said.


Finance Minister Mangala Samaraweera said that no government could bear the brunt of ensuring the survival of loss making state-owned enterprises unless urgent reforms are introduced and implemented in the SOE system.


The colossal losses made by SOEs including state-run SriLankan Airlines, state media institutions and state energy enterprises are incalculable unlike the losses caused to the economy by floods, droughts, constitutional crisis and even the Easter Sunday bomb attacks whose losses are calculable. I mean, the losses incurred by the SOEs are immeasurable," he said.


The finance minister went on to say that it's time for a national debate on whether the country can and should afford to operate SriLankan Airlines that bleeds the Treasury.


These comments were made at the Finance Ministry where 10 SOEs signed Statements of Corporate Intents which came under the purview of eight public corporations. They were State Pharmaceutical Corporation, ,MILCO, Lanka Sathosa, National Livestock Development Board, State Timber Corporation, Geological Survey and Mines Bureau, Central Engineering Consultancy Bureau and Sri Lanka State Plantation Corporation.


This was the second round of signing SCIs which had been organised by Thilaka Jayasundara, Director General of Public Enterprises Department.


The first round's Corporate Intent signers were CEB, Water Board, CPC, Ports Authority and Airport and Aviation. More SOEs are expected to sign SCIs in the future.


 
 
 
 
 
 
 
 
 
 
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