Sri Lanka’s State-Owned Enterprises (SOEs) remain the ultimate barometer for the island’s macroeconomic health. Following a historic collapse in 2022, the state sector swung violently from catastrophic losses to sudden profitability, only to face a cooling-off period of structural fragmentation. Official data from the Ministry of Finance and Planning across 2023 to late 2026 shows how changing political regimes and fundamentally opposing economic philosophies have shaped the current status quo.
The Financial Timeline: 2023 to Now
- 2023:
- LKR 456 billion Profit (Turnaround from a record LKR 743B loss in 2022)
- 2024:
- LKR 539.1 billion Profit (High profitability driven by state banks and fuel price adjustments)
- 2025:
- LKR 444.4 billion Profit (A 17.6% drop year-on-year; major utilities slip back into red)
- 2026 (Q3):
- Mixed / Transitional (CEB dismantled; Treasury absorbs LKR 554B in bad debts)
The Ranil Wickremesinghe Era: IMF Shock Therapy (2022–2024)
The massive profit surge of 2023 was the direct result of former President Ranil Wickremesinghe’s aggressive, market-driven policy framework aligned with an International Monetary Fund (IMF) rescue package.
- Cost-Reflective Pricing: Overnight, utilities like the Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB) began charging true market rates.
- Banking Profits: High-interest rates enforced by the Central Bank allowed massive state institutions like the Bank of Ceylon and People’s Bank to rake in record interest revenues, masking the deeper losses of smaller commercial SOEs.
- The 2023 Baseline: Under this rigid framework, key entities hit significant operational highs:
- Lanka Sugar Co.: Recorded an LKR 3 billion profit.
- CEB: Registered an LKR 57.6 billion profit.
- SriLankan Airlines: Achieved a rare LKR 3.4 billion profit.
Wickremesinghe’s primary goal was rapid fiscal consolidation and preparing commercial entities for total privatisation. However, these subsidy cuts placed an immense cost-of-living burden on everyday citizens.
The NPP Government Era: Vows of Anti-Corruption vs. Operational Realities (2025–2026)
Upon taking office, President Anura Kumara Dissanayake’s National People’s Power (NPP) government swept into power vowing to eradicate corruption, clean out the stables, and boost state profits. The NPP rejected selling off strategic state assets, choosing instead a different approach under the IMF banner: eliminating political patronage, merging overlapping agencies, and shutting down dead weight.
The Policy Interventions:
- The Bill: Drafted the Public Commercial Enterprises Management Bill to professionalize board appointments.
- Liquidations: Executed the total liquidation of 33 inactive, non-functional state firms bleeding micro-bailouts.
- Unbundling: Advanced the unbundling of the CEB into 6 successor firms to eliminate circular monopolies.
- Bailouts: Absorbed outstanding employee statutory liabilities (EPF/ETF) using an LKR 11 billion emergency framework.
The Governance Pitfalls and Flawed Results:
Despite the anti-corruption rhetoric, the operational reality painted a far more damaging picture. Critics point out that the government quickly replaced experienced, technocratic officials with their own political party members many possessing zero sector-specific knowledge or commercial experience. The administrative fallout was swift and severe:
- Financial Reversals: The hard-won profitability of 2023 completely evaporated. By 2025, the CEB plummeted to an LKR 38.7 billion loss, while SriLankan Airlines dove back into a deep LKR 23.2 billion deficit. Lanka Sugar Co. similarly reversed into an LKR 3.2 billion loss.
- Systemic Corruption: Rather than eradicating malpractice, the lack of experienced oversight opened the floodgates for mismanagement. Billions of rupees were lost across major entities via newly emerging scams, duplicate payments, and unverified remittances to fake accounts.
- Taxpayer Burden: Because these institutions became severely starved for liquidity, the Treasury was forced to step in. Taxpayers are now directly bearing the cost of an LKR 5 billion emergency bailout cushion just to keep basic operations afloat.
The Status Quo
Wickremesinghe’s policies provided the harsh fiscal stabilisation needed to stop the immediate bleeding. The NPP has traded the push for privatisation for heavy administrative restructuring. While state-backed banks remain profitable, the structural adjustments of 2026 show a government struggling to manage state entities like businesses. Taxpayers are now forced to directly settle LKR 554 billion in legacy debt while facing the consequences of bureaucratic mismanagement.
