ECONOMYNEXT – Sri Lanka’s state-owned enterprises are a burden on the economy which is eating 75 billion rupees in tax money to maintain but many do not provide a return, Finance Minister Basil Rajapaksa has said.
“There are approximately 300 state-owned enterprises in our country,” Rajapaksa said in a budget for 2022.
“These enterprises are engaged in the provision of various products and services. Most of these institutions do not provide returns on the investments made by the government.”
The government has invested over Rs. 670 billion in these state owned enterprises. In addition, annually about Rs. 75 billion is spent to maintain these entities.
Sri Lanka went on its last privatization drive in 2004 under a United National Party-led administration when the Marxist Janatha Vimukthi Peramuna claimed ‘national assets’ were being sold.
It also criticized trimming the civil service (rajya sevaya kappadu kireemer) when a voluntary retirement scheme was being offered.
At the time, the late Mangala Samaraweera joined them from the opposition and said Sri Lanka should have a mixed economy like Venezuela which has since crumbled with its Latin America style central bank. He later said he regretted the decision.
Anti-privatization then became the mainstream policy.
The last United National Party-led administration which was struck by severe policy fright continued the same policy of anti-privatization, expanding the public service, imposing price controls and printing money.
Sri Lanka is now facing sovereign default after the country’s own Latin America style central bank printed unprecedented volumes of money in 2020 and 2021.
Rajapaksa however stopped short of saying he was privatizing but said under-used land in state enterprises will be sold to the private sector. (Colombo/Nov15/2021)