Sajith Premadasa, the leader of the opposition in Sri Lanka, has expressed concern over the government’s plan to sell the country’s profit-making state institutions as well as its loss-making ones. According to him, although reforms are needed in the loss-making state institutions, the government should not resort to selling the profit-making ones to deceitful capitalists for dirt cheap.
In a special statement regarding the IMF’s Extended Fund Facility (EFF), Premadasa criticized the government for failing to secure the best agreement with the IMF for the country and its people. He said that the government reached out to the global lender at the last moment, leading to a suboptimal agreement.
“It is very much clear that loss-making state institutions should be reformed. A bankrupted country cannot maintain the unprofitable state institutions”, Premadasa remarked. He further stressed that the government’s weak policies have resulted in the sale of state institutions to capitalists across the world.
“The country has become a ‘land of auctions’ for capitalists across the world”, he alleged.
Premadasa argued that instead of selling state institutions, the government should create a suitable model for the country to convert the loss-making state institutions into profit-making ones and to ensure that the already profitable state institutions make even more profit. He suggested adopting the models used by Temasek in Singapore and Kazanah in Malaysia.
The opposition leader’s concerns come as the Sri Lankan government faces financial challenges due to the COVID-19 pandemic. The country’s economy is projected to shrink by 1.7% this year, marking its worst economic performance since independence in 1948. The government has had to resort to seeking financial assistance from international organizations like the IMF to address the situation.
The IMF’s Extended Fund Facility (EFF) is a financial assistance program designed to help countries experiencing balance of payments problems. Sri Lanka requested the EFF in May this year after its economy took a hit due to the pandemic.
However, the EFF agreement has been subject to criticism by the opposition and other stakeholders who claim that the government failed to negotiate a good deal. According to them, the government could have secured better conditions and avoided some of the harsh economic measures imposed by the IMF.
Premadasa’s concerns about the sale of state institutions are not without foundation. In recent years, some countries have faced criticism for selling off state assets at undervalued prices to foreign investors without ensuring that such investments benefit the local economy. For instance, in 2014, China took over control of the Hambantota port in Sri Lanka after the Sri Lankan government struggled to repay loans from China to fund the project. However, the takeover was criticized by many for being a “debt trap” that would hand over control of the Sri Lankan economy to China.
If the Sri Lankan government goes ahead with the sale of state institutions, it needs to ensure that the process is transparent and that the assets are sold at fair prices. Moreover, it should ensure that the investments lead to the growth of the local economy and benefit the Sri Lankan people.
In conclusion, Sajith Premadasa’s concerns about the government’s plan to sell state institutions are valid. While it is necessary to reform loss-making state institutions, the government should ensure that the process of selling profitable state institutions is transparent and benefits the Sri Lankan economy. In this regard, the government should adopt a suitable model that will help to convert loss-making state institutions into profitable ones and promote growth in the local economy.