Govt. to restructure SOEs instead of privatisation
The new government plans to establish the right economic system giving priority to increase accountability and efficiency of public sector institutions especially State owned Enterprises (SOEs),
Prof. Anil Jayantha, Senior Advisor on Economic Affairs to the President, stated that while some SOEs have become a financial burden, the government will not privatise key institutions essential to national security and economic stability, such as electricity, transportation, state banks, and capital markets.
Instead, the new administration will restructure SOEs like SriLankan Airlines, considering transparent and budget-friendly mechanisms as state funding is insufficient. This approach follows the previous government’s decision to halt privatisation plans for the national carrier.
The government aims to reduce taxpayer burden by introducing cost-reflective pricing, aligning SOEs with strategic goals, and enhancing their financial transparency and corporate governance.
Prof. Jayantha emphasised the need for all political parties to accept past mistakes in managing SOEs before advocating privatisation.
Analysts pointed out that previous efforts, including the establishment of the State-Owned Enterprise Restructuring Unit (SOERU), failed to complete any privatisation deals, despite costly consultancy fees.
The government recognises that SOEs face diverse challenges and will adopt a tailored approach to restructuring, potentially including semi-privatisation or the use of a super holding company, to meet fiscal consolidation targets set by the IMF.
These reforms are seen as essential for reducing public sector debt and improving access to finance, ultimately lowering costs for the private sector.
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