Completion of SOE reforms agenda critical to boost growth: Experts

By Nishel Fernando

Completion of SOE reforms agenda remains ciritical to enhance growth by boosting private sector credit growth in order provide required capital to the private sector along with other structural reforms.

Former Central Banker, Economist and Public Policy Specialist Dr. Roshan Perera  pointed out that Banking sector’s lending portfolio only included 20 percent lending to the government during 1995-1999 . However, this trend has nearly reversed at present.

She was speaking at the third Economic and Tax Symposium organised by CA Sri Lanka in Colombo yesterday.

Due to this crowding off effect, she noted that the private sector has been restricted of access to capital.

Joining the conversation, State Owned Enterprises Restructuring Unit Head Suresh Shah highlighted that SOE debt started to climb during the same period, which is an indication of high government borrowing for loss making SOEs from the banking sector, restricting private sector access to capital.

Hence, he stressed that need to complete SOE reforms to unlock potential capital for the private sector.
However, he feared that politics might interfere with this reform agenda, deviating the country to a risky alternative path as experienced in the past.

Despite reaching macro-economic stability, Perera noted that the country is yet implement most of the growth enhancing reforms as well other key reforms to sustain stability.

She stressed that country’s debt is still unsustainable with per capital public debt reaching Rs.1.3 million.

“Today, every man, woman and child owe Rs.13 million. This was only at Rs.80, 000 in 2001,” she stressed.

Meanwhile, Shah noted that the country was in need of a reforms agenda for the past 2-3 decades. Reforms mentioned in ‘Regain Sri Lanka ‘(in 2021) is still applicable in the current context, he added.