Sri Lanka’s economic recovery remains fragile, and a major roadblock to long-term fiscal stability continues to be the staggering financial burden posed by loss-making state-owned enterprises (SOEs-Loss-Making SOEs Bleeding). With seven key SOEs running in the red, the government is grappling with a difficult but unavoidable question: Can the country continue to sustain ventures that have become black holes for public finances?
The Alarming Scale of the Problem
At the forefront of the crisis is SriLankan Airlines, the national carrier that has amassed an eye-watering debt of nearly Rs. 340 billion. This single SOE alone represents one of the largest financial liabilities on the State’s books. Despite repeated calls for restructuring, privatization, or even liquidation, meaningful reform has remained elusive. The burden of this loss is ultimately carried by taxpayers, while the airline continues to operate with little hope of breaking even under the current model.
But the national carrier is only one part of a much bigger problem. Other SOEs have also racked up massive debts and operational losses over the years. Milco, a dairy product enterprise, has accrued debts of over Rs. 15.09 billion, while Lanka Sugar Company owes more than Rs. 11.16 billion. These figures are not just numbers on a balance sheet—they represent billions of rupees that could have been allocated toward essential public services like healthcare, education, and infrastructure development.
The State Plantation Corporation, long seen as an underperforming relic of the past, has accumulated Rs. 3.21 billion in debt, further highlighting the inefficiencies embedded in sectors that have failed to modernize.
State Media in Financial Crisis
The public broadcasting sector, often justified on the grounds of serving national interest and providing unbiased content, is also heavily indebted. The Independent Television Network (ITN) bears a debt burden of over Rs. 1.47 billion, while Sri Lanka Rupavahini Corporation registered a loss of Rs. 256 million last year. Its total debt now stands at Rs. 1.84 billion. Similarly, the Sri Lanka Broadcasting Corporation (SLBC) recorded a loss of Rs. 152 million, with a growing debt load of Rs. 1.60 billion.
These figures underline a simple truth: state-owned media enterprises are no longer financially viable. Despite having access to public funds and infrastructure, they struggle to compete with private sector media, both in content quality and commercial performance. Continuing to fund these entities places further strain on already stretched national resources.
Why This Cannot Continue
The argument for retaining state control over strategic assets has merit—but only if those assets are managed efficiently and sustainably. Unfortunately, the current state of SOEs in Sri Lanka shows that many of these institutions have become politically bloated, operationally inefficient, and financially unsalvageable.
Every rupee spent on bailing out these failing enterprises is a rupee not spent on rebuilding the economy or improving the quality of life for citizens. The ripple effects are enormous: higher public debt, reduced investor confidence, currency instability, and slower economic recovery.
Additionally, loss-making SOEs often crowd out private sector participation by monopolizing resources while failing to deliver results. This deters innovation, hinders competition, and reduces the overall productivity of key sectors in the economy.
The Case for Reform
President Disanayake has underscored the urgent need for structural reforms within these institutions. If Sri Lanka is serious about restoring macroeconomic stability, SOE restructuring must be prioritized. This includes options such as privatization, public-private partnerships (PPPs), and governance reform to eliminate political interference and ensure accountability.
Moreover, performance-based budgeting and transparent reporting mechanisms must be introduced. Public funds should only support SOEs that demonstrate potential for turnaround, strategic national value, or essential service delivery.
Countries like India and Vietnam have successfully restructured their SOEs, transforming former liabilities into profitable enterprises or productive public-private ventures. Sri Lanka must take note and move in the same direction—urgently.
Conclusion – Loss-Making SOEs Bleeding
Sri Lanka’s economic crisis demands bold and decisive action. Continuing to fund loss-making state-owned enterprises is not only unsustainable—it is economically irresponsible. The government must shift its focus from preserving failing institutions to building a leaner, more efficient public sector that enables private sector growth and improves public service delivery.
Failure to act now will only deepen the country’s fiscal woes and prolong the suffering of its people. Reforming the SOE sector is not just an economic necessity—it is a moral obligation to future generations.
