Sri Lanka public enterprises eating development capital: minister

June 29, 2009 (LBO) – Sri Lanka’s state enterprises are eating capital that could have been used for the country’s growth, while some workers are getting a salary and not even reporting to work, a senior government minister said.

“For almost 50 years our state enterprises have stolen from the treasury,” deputy finance minister Sarath Amunugama told a seminar on poverty organized by the Institute of Policy Studies, a think tank in Colombo.

“All the money has been pocketed by the state entities’ chairmen, directors and employees.

“How will we have money for growth?”

In 2008, the Treasury had given 12.4 billion rupees as subsidies to state enterprises. The Treasury has also given 506 million rupees to defunct enterprises.

Departmental enterprises like the railways had lost 4.5 billion rupees in 2008. The state bus service had lost 4.0 billion rupees.

Tax Twist

This year a new twist was added to the equation. The government had brought a new law allowing tax payments from badly managed loss making state enterprises to be waived, ostensibly to stop Treasury subsidies to cover defaulted taxes.

But critics say the move will reduce fiscal transparency and hide the true extent of losses m