Government has made some strides with regard to the reform of state-owned enterprises (SOEs), but there is still a lot of work to be done.
This assessment came on Tuesday night from Minister in the Ministry of Finance, Ryan Straughn, as he delivered a Ministerial Statement on the Quarterly Financial Report of the SOEs, in the House of Assembly.
Mr. Straughn said: “Unfortunately, the analysis of the data suggests that the SOE portfolio, to a large extent, underperformed during the quarter under review, and that the financial performance was weak at both the aggregate level and within the groupings. Additionally, although it is appreciated that a lot of work is being done on the financial analysis side, the risk management and non-financial areas will need to be strengthened.”
He explained that a number of SOEs were now being reformed under the International Monetary Fund’s (IMF) Extended Fund Facility programme and would be closely monitored through structural benchmarks, thus allowing for timely implementation of additional measures, should slippage occur.
He noted that one of the structural benchmarks was the requirement that a standardized quarterly financial report be laid in Parliament.
He said the quarterly report at December 31, 2018, reported on 51 SOEs out of the 57 that were being monitored, which represented a 90 per cent compliance rate.
According to Mr. Straughn, six SOEs had not complied, and this was a clear contravention of the directives from the Director of Finance and Economic Affairs, who stipulated that SOEs were to report their quarterly financial information by the 5th of the month, following the end of the quarter.
Stating that the arrears of SOEs was an issue that had plagued the country for a number of years, the minister stressed that it was of significant concern to the government, as the size of the deficit was directly impacted by these arrears.
He pointed out that government, in its attempt to address this issue, had instituted a number of measures to clear a significant portion of the arrears held by the SOEs. He said the initiatives included writing off inter-governmental transactions occurring between SOEs and other public sector bodies.
Mr. Straughn stated that the data in the report suggested that there were still a few issues with regards to the management of arrears, but they were being dealt with. “Although a number of reasons have been cited for this, it is unacceptable as it can derail the programme, if not stemmed.
“One of the major highlights within the SOE sector relates to the impending enactment of the Public Finance Management Act. This legislation is scheduled to be proclaimed shortly and should provide the government with a strong legal framework that would target the areas of deficiency within the SOEs, that include gaps in accountability, transparency and fiscal prudence.
“The standardization of the financial reporting within the SOEs is also an area that is to be addressed, and this would have the dual purpose of assisting in improving the comparability of the SOEs financial statements, as well as improving on the quality of the financial data and accompanying notes being submitted,” the minister stated.
Mr. Straughn disclosed that efforts were also being undertaken by government to accelerate the completion of the audited financial statements of the SOEs.
“This exercise, which is also a key requirement of the IMF supported programme, would greatly assist the government as the owner and shareholder of the SOEs, to obtain better assurance with regards to the reliability of the information contained in the financial statements,” he said.