Under the new leadership, the International Monetary Fund (IMF) has laid emphasis of the need to fast-track the process of restructuring SriLankan Airlines, in addition to see progress related to other state owned enterprises (SOEs).
IMF Mission Chief for Sri Lanka Evan Papageorgiou, in a virtual press conference, said that the authorities concerned had undertaken steps in preparing a medium-term strategic plan to restore the operational viability of Sri Lankan Airlines and to resolve its legacy debt.
“We know that the current budget has set aside Rs. 20 billion rupees to pay off some of the debt of the airline. We are also aware that Sri Lankan Airlines has also hired a financial advisor to restructure its international bonds. But we think these need to pick up pace so we can have a good resolution of all these outstanding issues. In general, with SOEs, we think there is a way forward. We want to see more progress there,” he said.
Evan Papageorgiou, the former Deputy Division Chief of the IMF's Asia and Pacific Department, is now the new head of the IMF mission in Sri Lanka.
He added further that the government had committed in general from the beginning of the programme to strengthen governance of SOEs, to get to the bottom of their outstanding debt and resolving legacy debt.
The operation of SOEs without a burden to the state, containing risks from the guarantees issued to SOEs, refraining from foreign exchange borrowings by them, and making them more transparent are among conditions stipulated. Publication of audit reports of 52 SOEs in a timely manner is also highlighted.
“It is also important to ensure that consumers of services of these SOEs receive the best value for the price they pay. Obviously that relates to a wider range of SOEs, including also the electricity and the fuel sector. This is the same thing as you would expect from a private company. In other words, you would want SOEs run in the most efficient manner purely on a commercial basis and ensure that they are dependable and free of corruption,” he said.
The Sri Lankan government has decided to reverse its decision to privatize SriLankan Airlines, announcing a bold restructuring plan aimed at revitalizing the national carrier and ensuring profitability.
President Anura Kumara Dissanayake made an announcement of the policy change during a high-level meeting with senior officials from SriLankan Airlines at the Presidential Secretariat.
The discussions on the SriLankan Airlines were centered on restructuring the airline to ensure its long-term sustainability, reduce debt, and attract new investments.
The previous administration had planned to privatize SriLankan Airlines as a key element of its wider economic reform agenda.The carrier has faced severe financial difficulties for years, accumulating significant debt while facing intense competition from bigger regional airlines.
The privatization plan followed Sri Lanka’s economic crisis in 2022, which led the country to seek support from the International Monetary Fund (IMF).
On the expedition of turn around of Srilankan economy, considering that the growth is on the rebound, the reserve accumulation and structural reforms in progress, it is ‘very important’ to note also that debt restructuring is nearly complete and the government's commitment to programme objectives remains steadfast.
“However, we must also acknowledge the significant downside risks posed by global trade policy uncertainty. Should these risks materialise, we are prepared to work collaboratively with the authorities to assess their impact and formulate appropriate policy responses within the framework of the IMF-supported programme. The country's achievements under the ambitious reform agenda have been commendable,” he said.
In another development, SriLankan Airlines is pursuing a significant financial and legal settlement from plane maker Airbus, demanding the credit of USD23.3 million in pre-delivery payments, USD200 million in compensation, and the delivery of four A330-900Ns at no cost charge, with the aim of having them delivered within the year.
These demands are tied to a long-standing deal involving the purchase of six A330-300s and four A350-900s, which was marred by corruption allegations in the procurement process. While the A330s were delivered to the airline via lessors, the A350s never materialized.
SriLankan Airlines has been operating routes connecting Sri Lanka with key international destinations across Asia, the Middle East, and Europe, serving as an essential gateway for the country’s tourism industry.
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