May 01, Colombo (LNW): The International Monetary Fund has called for swifter action on the restructuring of SriLankan Airlines and greater momentum in the overall reform of state-owned enterprises (SOEs), highlighting their importance in securing the long-term stability of the country’s public finances.
During a virtual briefing, Evan Papageorgiou, the IMF’s Mission Chief for Sri Lanka, outlined concerns regarding the pace of progress, noting that whilst the government has initiated several steps—such as the appointment of financial advisors for the airline’s international debt restructuring and a budgetary allocation of Rs. 20 billion to address legacy debt—more rapid movement is essential.
He stressed that resolving long-standing issues within the national carrier must remain a top priority to ensure its operational sustainability.
SriLankan Airlines, once considered a key asset in the nation’s aviation and tourism sectors, has become emblematic of the broader challenges facing SOEs in the country. Encumbered by mounting debts and years of financial mismanagement, the airline continues to draw heavily on state resources, creating pressure on the national budget.
Whilst a medium-term strategic plan is reportedly being developed to tackle these issues, the IMF is pressing for clear timelines and measurable outcomes.
The Fund also turned its attention to the broader landscape of SOEs in Sri Lanka, calling for decisive action to enhance transparency, governance, and efficiency. This includes avoiding further foreign currency borrowings by state entities, reducing reliance on sovereign guarantees, and improving financial reporting through the timely publication of audited accounts.
As part of the current programme, the government has pledged to release audit reports for 52 key SOEs, a move seen as critical to rebuilding public trust and investor confidence.
Papageorgiou stressed that SOEs should be managed with the same efficiency and accountability as private sector enterprises. “Consumers must receive value for the money they pay,” he said, emphasising the need for commercial discipline in sectors such as electricity and fuel distribution, which have been plagued by inefficiencies and political interference for decades.
While acknowledging recent progress, including an uptick in economic activity, improved foreign reserve buffers, and a sustained commitment to structural reforms, the IMF warned of external challenges that could derail recovery.
Papageorgiou pointed to uncertainties in global trade policy as a significant downside risk, cautioning that any deterioration in external conditions could necessitate a recalibration of policy responses.
Nevertheless, the IMF remains broadly optimistic about Sri Lanka’s reform trajectory. The government’s continued dedication to the programme’s objectives, particularly in the area of debt restructuring, was described as encouraging.
The near-completion of debt negotiations marks a key milestone, but the Fund insists that follow-through is essential—not just on paper but in the tangible transformation of state institutions.
