Pics courtesy SriLankan Airlines

With the national carrier, Sri Lankan Airlines continuing to incur significant losses, a resolution strategy for SriLankan Airlines is expected to be completed by September 2016, thus removing the company from government’s accounts, the recent Staff Report of the IMF reveals. The report states that cabinet approval has already been obtained for the government to take over all its liabilities and to identify a suitable partner who can successfully manage the operations of the airline, on the foundation of a clean balance sheet.

“As the financial condition of some of the State Owned Enterprises (SOE) has deteriorated significantly, a comprehensive strategy is currently being developed by our authorities to decisively address the issues related to SOEs and thereby minimize the associated fiscal risk,” a joint statement made by IMF’s Executive Director, Subir Vithal Gokarn and Alternate Executive Director on Sri Lanka at the Executive Board Meeting Mrs. Swarna Gunaratne on June 3, 2016 stated.

The statement noted that the Ceylon Petroleum Corporation (CPC) and Ceylon Electricity Board (CEB) have incurred losses due to implicit energy subsidies and therefore, an automatic fuel and electricity pricing mechanism that ensures retail prices above cost recovery levels will be introduced by end 2016.

“To enhance oversight and financial discipline, the six largest SOEs are expected to publish Statements of Corporate Intent (SCI) highlighting their mission, objectives, corporate and financing plan to meet future objectives. Also, the legal framework for governance and oversight of SOEs will be strengthened,” the statement highlighted.

It further said that as promoting Sri Lanka’s export sector with greater integration into regional and global supply chains is one of the main priorities of the authorities, a Development Agency for the prioritization of infrastructure investments and Trade
Agency for trade promotion and negotiation of trade and investment agreements will also be established. (AR)