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Why does Sri Lanka need a national airline when India doesn’t have one?: Prof. Rohan Samarajiva

09 Dec 2021

  • Prof. Rohan Samarajiva suggests SriLankan be privatised
  • Says airline has to be given away for a pittance due to ‘black mark’ 
BY Shenal Fernando Amidst a whopping amount of losses national carrier SriLankan Airlines has been making for years, LIRNEasia Founding Chair and Advocata Institute Advisor Prof. Rohan Samarajiva questioned why Sri Lanka would need a national carrier when India, the neighbour, does not have one.  During a press briefing organised by Advocata Institute on “The Urgency of State Owned Enterprise Reforms”, Prof. Samarajiva stated that SriLankan Airlines should be privatised to not only save public money, but to also improve the credibility of the country by showing the country’s creditors that Sri Lanka is genuinely committed to meeting its debt payments.  Prof. Samarajiva pointed to the fact that Sri Lankan is hemorrhaging around Rs. 47 billion in losses per annum and questioned the rationality of using public funds collected through commodity taxes from a person who has never even gone near the airport.  Explaining further, he stated that when the Government reduced taxes in 2019, rating agencies downgraded Sri Lanka as it gave the impression that the country has no genuine intention of meeting its payments immediately after the Covid-19 pandemic hit the country. Due to this situation, our debt situation has reached a critically dangerous state which requires us to restructure our debt, according to Prof. Samarajiva. “Currently Sri Lanka lacks credibility to approach our creditors. Therefore, the privatisation of SriLankan Airlines represents a grand gesture to alter the existing perception regarding Sri Lanka’s sincerity in meeting its debt obligations and will go a long way in improving our credibility,” claimed Prof. Samarajiva.  “In this current situation it’s not possible for us to raise revenue; what we have to do is cut expenses. We will communicate a strong message of responsibility and of commitment to anyone who has given us loans and they will say: ‘This is the country we should negotiate with because they are serious about their economic problems’.”  He further claimed that it’s unlikely that the State will receive a significant compensation for the sale of SriLankan Airlines, but regardless, the priority of the State should be the avoidance of future losses by this state-owned enterprise.  “When we sold 40% of SriLankan Airlines, we were able to get $ 18 million back in 1998-99; no way will we be able to get that kind of money because this is an airline with a black mark, it was a place which was privatised and the investor was abused. Many people have told me that we will have to give away the airline and that is in fact what happened in India. Air India was more or less given away for a pittance,” stated Prof. Samarajiva.  During Advocata’s press briefing, it was revealed that Sri Lanka has 527 state-owned enterprises (SOEs), of which 55 are classified as “Strategically Important” by the Treasury. A key issue raised was the lack of financial disclosures from SOEs as only 10.4% of SOEs have made their financial information publicly available. It was further revealed that the cumulative losses of the 55 “Strategically Important” SOEs during the period from 2006 to 2020 amount to Rs. 1.2 trillion. Commenting further, it was claimed that in-depth analysis of Sri Lanka’s SOE losses reveals the misguided priorities of the country. Because, as of 2019, SOE losses amounted to 310.9% of expenditure on Samurdhi, 56.8% of healthcare expenditure, and 47.8% of the expenditure on education.

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