SOEs losses to increase further
View(s):Sri Lanka’s State Owned Enterprises (SOEs) faced with high debts and financial costs are poised for either reduced profits or increased losses this year.
These SOEs are also saddled with issues relating to lack of governance practices, accountability mechanisms unsatisfactory debt management and overstaffing, etc.
According to Treasury data, outstanding debt to banks of SOEs during the first four months of this year was Rs.491 billion and it has recorded a loss of Rs.9.36 billion.
Earnings of some of these state enterprises are expected to decline further as government has failed to introduce reforms to consolidate the sector, temper fiscal risks and bolster the nation’s defenses to external shocks, a top Treasury official said.
These loss-making enterprises need massive budget allocations each year for their sustenance, he pointed out emphasising that funds otherwise could have been used for other important sectors such as education, healthcare and infrastructure.
Out of the 400 SOEs, 264 are monitored and supervised by the Department of Public Enterprises of the Treasury and the remainder 136 SOEs fall under the Department of National Budget of the Treasury.
According to Finance Ministry’s mid-year fiscal position report 2018, the importance of the SOEs especially the State Owned Businesses Enterprises (SOBEs) to the economy is very significant.
The government has taken several measures to encourage and facilitate the SOBEs to be self-sufficient.
This has been done through improved corporate practices, management reforms, innovative financing, strong and prudent financial management, exposure to competitiveness and international best practices and effective human resource management while enhancing public accountability, the report revealed
During 2017, 55 SOBEs alone have recorded a total turnover of Rs. 1,755.5 billion which is almost 13.2 per cent of the Gross Domestic Product (GDP).
Out of the 55 SOBEs, 39 recorded a net profit amounting to Rs. 136 billion while 16 SOBEs made net losses amounting to Rs. 87 billion during 2017.
The total asset base of SOBEs grew by 13.6 per cent in 2017 over 2016 and it accounted for almost 56.8 per cent of GDP.
The Department of Public Enterprise (PED) Statement of Corporate Intent (SCI) was introduced by the Department of Public Enterprises (PED) during 2017 with a view to improve the performance of those SOEs.
Public Private Partnerships (PPPs) will play a key role in restructuring these SOEs, and the budget allocated funds to operationalise the National Agency for Public Private Partnership, which will be the single facilitation point for all stakeholders in designing and implementing PPPs, the official said.