In a bid to combat corruption and enhance governance within state-owned enterprises (SOEs), Sri Lanka is set to introduce the Public Commercial Business (PCB) Act by May 2024, following recommendations from the International Monetary Fund (IMF).
Critics have long accused Sri Lanka's politicians of using state enterprises for patronage, providing jobs to associates, misappropriating assets for personal use, and facilitating nepotism in key appointments. Moreover, economists within the government have allegedly manipulated SOEs for off-budget subsidies and utilized them to borrow through state banks, exacerbating inflationary pressures.
Among the notable incidents, the Ceylon Petroleum Corporation has accumulated billions of dollars in loans from state banks, raising concerns about fiscal sustainability. In addition, high-profile procurement scandals have tainted the reputation of several SOEs.
To address these issues, Sri Lanka's cabinet approved an SOE Reform Policy in May 2023, laying the groundwork for the drafting of the PCB Act. The proposed legislation aims to establish a holding company to oversee SOEs, introducing mechanisms for transparent governance and accountability.
Once enacted, the PCB Act will empower the government to appoint an Advisory Committee and Board of Directors to supervise the operations of SOEs, ensuring adherence to best practices and ethical standards.
The move reflects Sri Lanka's commitment to reforming its public sector and fostering an environment conducive to economic growth and integrity.
