State-owned Enterprises: Losses cost Rs.141,809 per household

The Advocata Institute in Colombo highlights the urgent need for reforms in Sri Lanka's State-owned Enterprises (SOEs), stressing that the government's procrastination is burdening taxpayers. With losses reaching Rs. 744.6 billion in 2022 alone, equivalent to significant per capita costs of Rs. 1.7 million per registered taxpayer, Rs. 33,949 per citizen, and Rs. 141,809 per household, the institute underscores the necessity for reform continuity regardless of political cycles. Despite an uptick in tax revenue, projections indicate an inability to cover SOE losses for 2024. The slow pace of restructuring jeopardizes citizen welfare and international competitiveness, as emphasized by the International Monetary Fund's recommendations. Notably, transparency in financial reporting remains scant among SOEs, perpetuating corruption concerns.

Efforts to reform SOEs, including the establishment of a State-owned Enterprise Restructuring Unit and the passage of related legislation, are acknowledged. However, setbacks, such as delays in SriLankan Airlines' divestment, exacerbate taxpayer burdens and underscore the politicization of SOEs. Financial journalist Shihar Aneez asserts that SOEs are exploited for electoral gain, with taxpayers bearing the brunt of inefficiencies and corruption. The recent absorption of $510 million in debt by the treasury further highlights the fiscal strain, adding approximately Rs. 347,000 per taxpayer and approximately Rs. 98,000 per Sri Lankan household. Overall, urgent, transparent reforms are imperative to mitigate SOE-related economic risks and safeguard taxpayer interests in Sri Lanka.

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