The burden of loss-making government institutions has always been borne by the people including the most destitute and last year alone they have made a loss of about Rs 800 million. President Ranil Wickremesinghe in his policy statement to the parliament said that therefore we should immediately carry out economic reforms.
He said that countries like Thailand and Vietnam that have taken such steps are moving forward day by day and if we do not follow it would only retard our economic development.
He stressed the need to accurately identify the role of the government in these reforms and said the strategy of the government should be to guide the private sector in business activities, while being in the background.
Government should intervene only in areas such as monitoring functions, public facilities and maintenance of law and order. The private sector should be used as the driving force of the economy. Also, private entrepreneurship should be utilized to strengthen foreign economic relations.
Latest data has shown that the losses of 52 strategically important State-owned enterprises (SOEs) have amounted to over a staggering Rs. 800 billion last year (2022).
Meanwhile State Minister of Finance Shehan Semasinghe had recently admitted that this is not an amount an economy like ours can continue to suffer. He had said that the government was concentrating mainly on the institutions that have caused the heaviest losses such as SriLankan Airlines, the Ceylon Petroleum Corporation (CPC), and the Ceylon Electricity Board (CEB).
He has said that only the losses of these 52 SOEs have been calculated thus far but that the amount would be much higher if all 400 SOEs were taken into the calculation.
Semasinghe had emphasized the need to expedite the reforms pertaining to SOEs and broaden the tax net which is also a key decision that the Government has to make.
A committee has been appointed by President Ranil Wickremesinghe in his capacity as the Minister of Finance to conduct a study and provide a proposal to the Government with regard to the future steps of various SOEs.
The resolution for the restructuring of State enterprises was presented to Parliament by the President in the interim Budget of 2022 as well as in the Budget presented for the year 2023.
Accordingly, the State Enterprises Restructuring Unit has already been established under the Ministry of Finance, Economic Stabilisation, and National Policies in order to facilitate the restructuring process of State enterprises. Some of the entities targeted for restructuring are State-owned companies of which the Government is the majority shareholder, while some SOEs operate as corporations.
The Cabinet of Ministers recently approved a proposal to establish a parent company affiliated to the Treasury with 100% equity ownership by the Secretary to the Treasury and to register the State enterprises identified for restructuring as subsidiaries of the said parent company to accelerate the restructuring programme.
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