Sri Lanka state firm bank debt has doubled in a year: Central Bank

April 15, 2007 (LBO) – Sri Lanka’s state corporation debt to the banking system has doubled in 2006, with energy firms accounting for most of it, the Central Bank said in its annual report. The bank called on the government to consider promoting Public- Private Partnerships as a viable alternative financing mechanism for developing much-needed infrastructure facilities.

“The Ceylon Petroleum Corporation (CPC) and Ceylon Electricity Board (CEB) remained the biggest debtors among state corporations, accounting for 83 percent of the total outstanding liabilities to the banking system from state enterprises amounting to 17.2 billion rupees and 10.3 billion rupees, respectively,” the Central Bank said.

Energy Losses

Debts of non-financial public corporations to the banking system almost doubled from 16.7 billion rupees to 33.2 billion rupees.

Total debt of public corporations including an Indian credit line to the Ceylon Petroleum Corporation of 12.9 billion rupees (120 million US dollars borrowed in 2005) amounted to 46.1 billion rupees.

The delays in reform to the CEB and losses which are funded with bank credit have inflationary and balance of payments implica