By politico staff writer
A delegation from the regional branch of the International Monetary Fund (IMF) has deliberated with Fiscal Risk Management officials in the Ministry of Finance on the challenges faced by State-Owned Enterprises (SOEs) in their operations.
The three-day engagement workshop commenced on Thursday 2nd February 2023 at the Accountant General’s Department, George Street in Freetown, and it is expected to see the development of a fiscal risk management framework for these enterprises.
The Principal Deputy Financial Secretary, Mathew Dingie encouraged staff to be open in the technical discussions so that they will be able to solicit solutions to remedy the challenges faced by SOEs.
He informed the gathering about the establishment of the fiscal management risk division in 2018 to address the pressure coming into the budget through the SOEs in terms of pay-out and debt, which forced some of the enterprises to go into liquidation, creating burden on the government.
“The formation of the Fiscal Risk division was to scrutinize these entities and pressure them to raise revenue for themselves and by extension the government”, Dingie said.
He explained how the government has implemented a lot of reforms over the years to minimize the financial risk of these SOEs including the availability of early and prompt information.
Senior Economist in the finance ministry Catherine Kambai during her presentation highlighted the major sources of SOEs' fiscal risks, their financial vulnerabilities, contingent liabilities and exogenous shocks.
She said that there are currently sixteen active SOEs in the country that represent a large cost to the budget due to increased provision of subsidies to quasi-fiscal operations. She also stated that if these enterprises are left to operate in vibrant sectors, they may also undermine economic growth.
IMF’s regional Advisor of Public Financial Management, Kubai Khasiani, said they will help train staff on how to develop a framework that can assist in the monitoring of financial risk, using such information to plan.
A contextual model is also to be developed to tackle the outstanding macroeconomic risks.
An expert from Ghana, Catherine Effah shared her experiences working in Ghana on mitigating fiscal risks.
Two other IMF experts, Bernard Drum and Dzinga Francis Chapfuwa explained how countries around the world try to solve the related problems and spoke about the importance of getting pre-information from these enterprises in Sierra Leone, and understanding the Matrix, for them to be able to come up with a framework suitable for the Sierra Leone situation.
A state-owned enterprise is an entity that is formed by the government for the purpose of engaging in commercial activities. The government usually takes either full or partial ownership of any SOEs, which are typically approved to engage in specific activities.
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