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. (Courtesy Reuters)

2 COMMENTS

  1. Rajapaksa was removed from power by Westerners because he did not beg IMF for money. Now Sri Lanka is a slave of IMF so people who are responsible for this should be punished for betraying Sri Lanka.

  2. The IMF has put sell ours all national wealth to foreign power of interest USA, UK, Japan and Indians .
    We overall lost ours national wealth and Economic sovereignty by IMF proposals since 2015 January 9th.

    The granting IMP package has no right surrender nation wealth to foreign capital forced by IMF vested interest .

    Our Country become new colony of IMF line of Neo-liberalism.

    We are approaching economic crisis of dislocation of whole economy by misrule of UNP-Ranil and CBK of SLFP’s of Federalist line of undemocratic governances.
    Since 2015 January of 25 months is NOT THAT long-period of ISLAND, which ours history push for impending catastrophe of Sri lanka.

    The Economic control and measures of control complex ,difficult, untried and even unknown to right-thinking people of Sri Lankan.

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