Sri Lanka’s savings ratio to go up if state firms cut losses

Apr 12, 2013 (LBO) – Sri Lanka’s domestic savings ratio will be boosted if large losses in state enterprises are reduced, Central Bank deputy Governor Nandalal Weerasinghe said.

In 2012, Sri Lanka had a domestic savings rate of 17.0 percent of gross domestic product with the central government running a current account deficit (dis-saving) of 1.4 percent of GDP.

The private savings rate was therefore 18.4 percent in 2012. But due to a classification problem, state-enterprises which are ultimately controlled by the elected rulers are also lumped together as ‘private sector.”

Officials say a more accurate private savings rate could be calculated in the future.

Over the last few years losses in state enterprises, especially energy utilities and transport sector have rocketed up, overtaking the profits of port and airport monopolies and some other small firms.

“The private sector has surplus savings,” Weerasinghe told reporters. “During the last two to three years they (energy utilities) have been running deficits. Basically they are dis-saving.

“That is one of the reasons that the government is very keen to introduce a cost-recovery basis for the price