22 August 2023 12:00 am Views - 154
By Kelum Bandara
In what appeared to be a staggering disclosure, 52 state-owned enterprises (SOEs) had incurred a loss of Rs.443 billion for five years between 2017 and 2022, and they relied on treasury-backed borrowings from the state banks, Daily Mirror learns. According to a document submitted to the Cabinet, this has led to a lot of non-performing loans within the banking system. The banking sector had lendings amounting to Rs.1.457 trillion to the SOEs, and some of them had been backed by treasury guarantees.
The report that was discussed in the Cabinet says that the quality of goods and services provided by these SOEs are considered inferior when compared to their private sector counterparts. The appointment of incompetent director boards, poor human resource and performance management system, cumbersome procurement process and political interference in decision-making are highlighted among the host of reasons that triggered the current plight of the SOEs. The government is currently in the process of restructuring and reforming these SOEs. The Cabinet, in January, this year, appointed a State-Owned Enterprise Restructuring Unit (SRU) under the Ministry of Finance, Economic Stabilization and National Policies. Also, the Cabinet also approved the setting up of a Holding Company (HoCo) to facilitate the restructuring of SOEs and to hold their shares on the government’s behalf.
The government is now planning to enact legislation to give effect to the policy to restructure these enterprises.