By Makutu Manneh
During the signing of a Performance Management Contract between the executive and three SOEs, Seedy K.M. Keita, Minister of Finance and Economic Affairs disclosed that the current trajectory of State Owned Enterprises is unsustainable.
“Urgent work is needed to joint collective measures to address these concerns. Our current quarterly internal assessment of the SOEs indicated that most of them are still financially distressed with serious liquidity challenges whereas some are even solvent,” the Minister disclosed.
He said over the past 15 years, the SOEs have posed significant challenges to the government particularly in the physical risk and this is due to the fact that they were not only paying dividends but also they were dragged on the public post due to the intervention the government had to do to bail them out.
Minister Keita added that between 2018 and 2020 alone one percent of the GDP was spent on bailing out the SOEs and this excludes the debt service payment made by the government on behalf of the SOEs which are yet to be reimbursed by the relevant SOEs.
“The SOEs post physical risks to the government which includes among others direct and explicit government obligations related to external loans, use of projects and the potential default on loans contacted directly by the SOEs with the government guarantee and the physical risks implicit in this,” he said.
“Government has written off or has taken over significant debts of SOEs totalling 3 percent of the GDP. On their tax obligations the SOEs have only paid 2 percent of the GDP in taxes on average between 2016 and 2019 and this is a reflection of the large tax exceptions and the limited ability to meet the tax payment due to their financial difficulties.”
According to Keita, the SOEs have assets totalling to 34 billion and around 25 percent of their GDP. He said their objective target rate is to return two to five percent of these assets to the central government.
He said the sector contributes significantly across the economy ranging from transport, agriculture, infrastructure, and media digital economy and energy and it provides employment to more than 7500 Gambians with a potential to employ more.
However, the Minister said his ministry has institutionalised and formed a quarterly SOE performance assessment that evaluates the performance of the SOEs and quantify the potential physical risks they post to the government.