Sri Lanka approves IMF reforms to loss-making state firms
Sri Lanka has approved reforms to make loss-making state firms more efficient and put them on a path towards autonomy, in line with International Monetary Fund conditions for a $1.5 billion loan, an official document showed on Wednesday.
The move comes as Sri Lanka struggles with heavy debts and balance-of-payments pressure while the government is in talks with an IMF mission in Colombo before disbursement of the second tranche of the loan.
The IMF has demanded reductions in losses at the firms including electricity board, Ceylon Petroleum Corporation (CPC), and ports authority – after successive governments failed to tackle the issue.
When the IMF approved the $1.5 billion 36-month loan in mid 2016, it estimated that four key state firms including national carrier Srilankan owe 1.2 trillion rupees ($7.93 billion).
According to the document seen by Reuters, the cabinet approved introducing Statements of Corporate Intent (SCI) for five state firms which would promote improved corporate practices, management reforms, better financial management and exposure to competitiveness – all steps towards self-sufficiency.
President Maithripala Sirisena’s administration is facing frequent protests by trade unions against planned reforms including partially or fully selling non-strategic investments such as Lanka Hospitals and some properties.
Sri Lanka is in the process of raising up to $2.5 billion from foreign lenders, but could face balance-of-payments pressure due to foreign outflows from government securities.
A delay in inflow of $1.1 billion from a 99-year port lease to a Chinese firm, sharp decline in foreign direct investments, and stagnant export revenue have weighed on foreign currency inflows.,
The government has also decided to sell 49 percent of its loss-making state airlines, which is left with debt of around $3.25 billion.
(Source: Reuters – By Shihar Aneez)
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There we go!
The first step in selling state enterprises.
Of course, I think it is a good move. Governments are meant to govern (identifying and reforming policy, enacting legislation, ensuring compliance, planning and implementing national budgets. social welfare) and not meant to run businesses.
It is time we dumped all Government enterprises in the Stock Market which now has adequate capacity to fund and manage loss making Government enterprises.
Jobs will be lost but economic gains will off-set job losses.
The Govt of late President Ranasinghe Premadasa sold the State Distilleries Corporation to a local tycoon.
Today it is a model business.
The Govt of President Mahinda Rajapaksa sold the Steel Corporation to a Dubai based Sri Lankan tycoon.
Today it is model business.
Likewise, the Yahapalana Govt of President Sirisena should sell all State owned enterprises including Sri Lankan Airlines.
In a couple of years, they will all be model businesses.
As Blogger Aruna says, the Govt’s are there to govern the country and not run business.
Well said, Aruna and Keerthi. I dont have to add anymore.
ECONOMYNEXT – Christine Lagarde, Managing Director of the International Monetary Fund may visit Sri Lanka as early as next month, official sources said.
An IMF mission is also in Sri Lanka conducting a review.
Sri Lanka collected more taxes from the people, boosting the revenue to gross domestic product ratio, in a program backed by the IMF.
However Sri Lanka has not been able to collect enough foreign reserves, amid bond investor exists and money printing to repay government debt.
Some structural benchmarks, including an automatic price formula has also not been implemented, which analysts say is a danger to macro-economic stability if oil prices continue to move up. (Colombo/Ja25/2017)
Christine Lagarde: IMF chief convicted over payout – BBC News
Professor Emeritus John Weeks of the University of London retorted: “The moral weight of Christine Lagarde’s matronising of the Greeks to pay their taxes is not strengthened by the fact that, as director of the IMF, she is in receipt of a tax-free annual salary of $468,000 (£298,000, plus perks).”[55][56]
The IMF quick fix formula is to sell whatever enterprise that generates income is to sell it and the governments past and now has accomodated to the IMF formula and sold whatever that was to sell out as opposed to adopting a hardline. The government as it is parasatizing on the subsistence farming sector and labour exported to the arab world which amounts unaccounted billions of dollars according to the central bank. The directors of the petroleum corporation cannot adopt a hard line for Corporation is expected to pump free gas to the legislature. Further they are authorised to import luxury vehicales which costs millions of dollars. For the past 2 years the government has been wanting to sell but there are no takers and it is unlikely why cant they close down shop and seel the aircraft for scrap saving billions of dollars on recurrent expenditure. Finally the resident IMF team in Sri Lanka is wasting time hob nobbing the foreign ambassadors and coktailing with the local elite without doing anything substantial something that Christine lagrade would enjoy doing.
Meanwhile the currient minister is not qualified to direct the activities of his ministry and the balance of payments would widen and the along with the budget feecit with proposed bribes to the supporters of the corrupt government
Christine le Grade was convicted of corruption a few months ago.
But she continues to be boss of the IMF.
That is Sri Lankan style, isn’t it? The more corrupt you are the higher you climb to perpetuate you corruption!