Friday, 03 July 2020 15:38

Sri Lanka’s COVID-19-hit SOEs get more capital injections

The government will be increasing capital injections for State-owned Enterprises (SOEs) as the COVID-19 pandemic disrupts business activities and batters the country’s economy, Finance Ministry sources said.

Multifaceted reforms will be launched in the post COVID-19 period and it is aimed at enhancing the governance structure by improving the composition of the boards of management, strengthening the balance sheets and creating scale of operations.

Strategic mergers of state-owned enterprises (SOEs) and economically viable and equitable pricing policies including price stabilisation mechanisms are among the proposed reforms.

The Treasury has initiated a study on the possible amalgamation and mergers of SOEs.

In doing so the factors that are being considered including the objectives of the SOEs, if there are similar and therefore overlaps and if a merger or acquisition could improve the business valuation of 148 SOEs, which continue to be a key element in the country’s economy
.
A Code of Governance drafted in line with the accepted practices will be issued in the second half of 2020.

Budgetary support to another 52 SOEs will amount to over Rs. 50.2 billion, of which Rs.20.3 billion is for recurrent expenditure including salaries and overhead costs this year, provisional estimates revealed
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These SOEs have made a staggering loss of over Rs. 214 billion during the past five months while posting revenue of Rs.740 billion.

(LIN)

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