Jan 04, Colombo: Ajith Nivard Cabraal, Governor of Central Bank of Sri Lanka has said that the state debt has risen due to the heavy losses suffered by the two major state institutions Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB).
Presenting the 2013 economic road map, the Central Bank Governor said that the government needed to change the situation of those two institutions running at a loss and policy makers need to consider price adjustments regarding the services provided by the CEB and CPC in 2013.
The CPC is selling fuel at a loss to the transportation sector and supplying fuel to CEB for electricity generation at a well below cost. The CEB is providing electricity at subsidized prices and significant losses are incurred, Cabraal pointed out.
"Urgent steps need to be taken to ensure that these two institutions reach at least break-even level by end 2013, in order to ensure their viability and to eliminate any imbalances being created in the banking sector," the Governor said in the Roadmap.
The Central Bank Governor also pointed out that the economic growth target of 8% that was suggested at the beginning of the year has been downgraded to 6.5%. He argued that similar changes in economic estimates are done by even the IMF although some critics do not understand the matter.