Sri Lanka SOE losses hurt investment and jobs: IMF

May 03, 2013 (LBO) – Massive losses at Sri Lanka’s state enterprises have a negative impact on people’s lives that are beyond accounting losses in the balance sheet, which hurts investment and jobs an International Monetary Fund official said. Last year state-run Ceylon Petroleum Corporation and Ceylon Electricity Board lost more than 150 billion rupees.

“It is not because we have some kind of undue concern for financial results,” IMF resident representative Koshy Mathai said.

“Those losses are a real drag on the economy.”

The losses were now hidden in the balance sheets Bank of Ceylon and People’s Bank, but they ate up savings in the banking system taking away investible resources eventually costing jobs.

“It is easy to put those losses aside because don’t see them in the central government budget,” Mathai said.

“They are hidden somewhere on the balance sheets of Bank of Ceylon and People’s Bank. When those banks are forced to lend such huge amounts there is correspondingly less money that has to be lent to the rest of the economy.

“And interest rates for the whole economy go very high as businesses are seeing now.

“When those interest rates are high, growth goes down and jobs are lost. So this is not a c