The NPP government has reaffirmed its commitment to reforming state-owned enterprises in a recent memorandum to the International Monetary Fund. The government has agreed to continue settling legacy debts and to limit foreign borrowing by non-financial public enterprises. While the administration opposes the privatisation agenda proposed by its predecessor, it has accepted the need for restructuring. The government reported that the Ceylon Petroleum Corporation and the Ceylon Electricity Board have already incorporated debt repayment into their pricing formulas. These measures are presented as part of a broader effort to improve the financial viability of SOEs.
The petroleum corporation is using a portion of the fuel price margin to repay $251 million in historical liabilities. As of the end of March 2025, $146 million remains outstanding. The electricity board’s remaining debt, estimated at Rs180 billion by the end of 2024, will be recovered through tariff adjustments beginning in June 2025. A strategic plan is also being developed for SriLankan Airlines to restore its operations and resolve its debt burden.
Reform of state-owned enterprises has long faced political resistance, and analysts argue that external intervention has been necessary to break the deadlock. Many SOEs operate with chronic inefficiencies, are overstaffed, and lack financial discipline. Without the leverage provided by the IMF programme, meaningful reform has been difficult to achieve due to union opposition and the political costs of downsizing and pricing reforms.
The government has promised steps to improve governance and transparency. These include introducing Statements of Corporate Intent to define mandates and using performance indicators to assess results. A revised framework for appointing SOE boards will ensure independence and qualifications. The government said that 45 of 52 major SOEs have published their 2023 audited accounts, and the remaining entities are still working through backlogs from 2020 to 2022.
A new SOE law, currently being drafted with World Bank assistance, will introduce rules on asset management and appointment procedures. The law will align with the Public Finance Management Act and establish government oversight. It is scheduled for enactment by the end of 2025.