SALCAB, SIERRATEL cannot service government external debts

The financial position of most of the state-owned enterprises (SOEs) has been described as weak as most of them are operating at a loss due to high administrative costs, below market charges for their services as well as inefficient management and poor governance. This is according to the Fiscal Strategy Statement (FSS), 2020-2022, where the Ministry of Finance stated that some of them owe debts to the domestic banking system and external private and public creditors. “Most of them cannot service the external debts on-lend to them by the Central Government (SALCAB and SIERRATEL).” The FSS went further to state that state-owned banks are saddled with high levels of non-performing loans, whose provision has eroded their capital base over the years. The banks, in particular it says require bailout in the form of recapitalization by the Government. In addition, the utility companies such as Electricity Generation and Transmission Company (EGTC), Electricity Distribution and Supply Authority (EDSA), GUMA and SIERRATEL and the Sierra Leone Road Transport Corporation (SLRTC) it revealed cannot cover their respective costs of production due to inefficient management and poor business models. These SOEs they say are not ‘financially and operationally sustainable’, resulting in poor service delivery. “They have not been able to pay dividends to Government instead they rely on subsidies from the Government” it stated. The Ministry noted that the continued weak financial operations of these SOEs poses a major fiscal risk to Government in the form of subsidies and or transfers as in the case of EDSA, EGTC, SLRTC and GUMA and recapitalization in the case of the state-owned banks.

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