Sri Lanka's loss-making state enterprises to be restructured

Sri Lanka on Thursday announced that a set of loss-making state enterprises would undergo structural reforms in order to help the economy recover from the ongoing economic crisis.

The announcement came days after the International Monetary Fund approved a USD 2.9 billion bailout programme to help the debt-ridden country overcome its economic crisis and catalyse financial support from other development partners.

A statement from the ministry of finance said that a group of State Owned Enterprises (SOEs) which have been identified for many years as a burden on the economy would be reformed on a priority basis.

The seven identified SOEs include the national carrier Srilankan Airlines, Sri Lanka Insurance, Sri Lanka Telecom and Lanka Hospitals.

The cabinet on March 13 had decided to divest the shares held by the state of several enterprises.

Addressing a public gathering, President Ranil Wickremesinghe said the state must do away with the policy of running businesses. He said the island had adopted the policy of state running the businesses since 1956 with adverse effects on the economy.

Wickremesinghe said that in the future, the public sector will stop engaging in business and open it to the private sector to create a free and productive economy.

The report considered by the IMF executive board on March 20 for the bailout said ''reducing the government's and SOEs' role in the economy is important for a more efficient allocation of resources, foster competition, and boost productivity. Reforms to strengthen SOE governance are a critical first step in this regard.'' Analysts, however, say the government would meet with employee and political opposition to the divestiture of state enterprises.

Sri Lanka in April last year declared its first-ever debt default in its history as the worst economic crisis since independence from Britain in 1948 triggered by forex shortages sparked public protests.

Months-long street protests led to the ouster of the then-president Gotabaya Rajapaksa in mid-July. Rajapaksa had started the IMF negotiations after refusing to tap the global lender for support.

Sri Lanka has introduced painful economic measures such as tax hikes and utility rate hikes to unlock the programme. Trade unions and opposition groups have organised protests against such measures.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)