Tuesday, May 28, 2024

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New legislation to curtail financial powers of State owned Enterprises

By: Staff Writer

May 05, Colombo (LNW): Sri Lanka’s State owned Enterprises (SOE’s) including the Central Bank and state banks are to be brought under a legal framework for appointments, management, procurement and capital spending with the enactment of SOE Act in parliament soon, Justice Minister Wijeyadasa Rajapakshe divulged.

It is aimed at improving governance of state-owned enterprise by May 2024 as part of anti-corruption efforts following an International Monetary Fund (IMF) governance diagnostic assessment

A legislation is now being drafted to boost governance providing provisions to cut down fiscal powers currently given to board of governors and directors of state owned entities he elaborated.    

Moreover the power of deciding salary structures and increments of the staff of SOEs including the Central Bank and state banks will be vested in the finance ministry and Parliament.

According to the draft SOE act, state owned enterprises will only be given administration powers and powers to take financial policy decisions on decisions. It will be not be  given any authority to increase salaries of employees.

“SOEs are susceptible to mismanagement and corruption as wells due to possible conflicts between ownership and policy making functions of the government, undue political interference on policies and business practices, “he claimed.

All commercial SOEs are required to publish quarterly accounts and an annual report similar to listed entities.

In addition, these enterprises should continue to appear before COPE as is done now. Extending the capacity of Public Enterprises Department (PED) to consolidate SOE data and its ability to analyse and report on SOE sector performance will contribute to more effective governance.

The Government maintains ownership and control over somewhere between 300 and 500 entities (527 to be exact) that it characterises as public corporations.

A Public Enterprises Department has been established within the Ministry of Finance which collates the budgets, business plans, and financial reports of 52 SOEs –those which it considers to be the most strategically important.

130 SOEs have been ear marked for conversion into public liability companies of which 17 were defunct and state intervention is not needed for 87 enterprises, the ministry report indicated.

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