SOE reforms vital, although monetary policies to put SL’s economy on right track are on – CBSL Governor

By Hiran H.Senewiratne

The government should expedite implementation of reforms relating to State Owned Enterprises (SOEs). However, the Central Bank is already implementing monetary policies to put the economy on the right track, CBSL Governor Dr. Nandalal Weerasinghe said.

“The Central Bank alone cannot do it. Parliament has to expedite implementation of reforms mainly in three state owned entities. Those are; Ceylon Petroleum Corporation (CPC), Ceylon Electricity Board (CEB) and Sri Lankan Airlines which have incurred heavy losses. The government needs to implement structural reforms in these institutions, concurrent to the Central Bank monetary reforms, Weerasinghe told the CBSL monetary policy review meeting, held at the CBSL auditorium last week.

Weerasinghe added: ‘At present the country is facing not only a dollar crisis but also a rupee crisis. These issues came about due to the previous government’s inaction or on account of not taking the correct decision at the correct time.

‘Both the CPC and CEB are running at a loss. Policy decision delays on these institutions adversely impact the economy.

‘The CPC wanted Rs 217 billion from the Treasury to purchase dollars to buy fuel for the country. Amid those developments, due to the rupee and dollar crises, the only option would be to print money, which is very critical for the sustainability of the rupee value against the dollar.

‘In the meantime, the CEB also owe money to the CPC and, therefore, both entities are facing major financial crises. Accordingly, monetary policy and public finance reforms on state- owned enterprises have to be implemented soon.

‘Our local import bill has gone down from US $ 2 billion to US $ 1.4 billion and that amount will further drop to US $ 1.3 billion. Our foreign reserves are at US $ 1.9 billion, including the swap from China. Our foreign inward remittances are down to US $ 350 million from US $ one billion.’

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