Sri Lanka central bank presses for reforms to state entities

Apr 11, 2011 (LBO) – Reforming Sri Lanka’s loss-making public enterprises could help the country cope better with external shocks like high crude oil prices, the central bank has said. Adjusting domestic prices such as fuel to be more in line with international prices would reduce the burden on the budget of these enterprises, it said in its annual report for 2010.

The state power utility, Ceylon Electricity Board, and refiner, Ceylon Petroleum Corporation, have been making losses for years but are being turned around under reforms agreed with the International Monetary Fund which has given Sri Lanka a 2.6 billion US dollar bail-out package.

The central bank said 2010 was the first full year of operation after the end of the island’s 30-year ethnic war with “impressive macroeconomic achievements” like accelerating growth rates.

“The challenge for policymakers today is to sustain these achievements with macroeconomic stability in the face of more frequent internal and external shocks,” the report said.

“The impact of disturbances arising from adverse external developments including price movements of commodities such as crude oil, could also be lessened through the i