ECONOMYNEXT – Sri Lanka’s Ministry of Finance has issued a circular directing all State-Owned Enterprises (SOEs) to overhaul their processes for donations, sponsorships, Corporate Social Responsibility (CSR) activities, and indirect business-related promotional expenses, while increasing their limits, a government document showed.
The Public Enterprises Circular, dated November 19 and circulated to statutory boards, SOE boards, and state banks, introduces a revised framework aimed at ensuring such expenditures align strictly with national development objectives, institutional mandates, and transparent governance standards.
The new directive subject to some strict conditions will allow a member of a SOE board of director to spend Rs. 100,000 per event, while it allows a director general of a Department of Public Enterprise to spend between Rs. 100,000 – 200,000 per event, the circular signed by Treasury Secretary Harshana Suriyapperuma showed.
The amount that could be donated by the Finance Minister has risen to above Rs. 1 million from above Rs. 100,000 while the amount for the Treasury Secretary has raised up to Rs. 1 million, for Deputy Treasury Secretary increased up to 500,000.
The directive revoked the previous 2018 circular and mandates that all promotional expenses by SOEs must not exceed 1 percent of their previous financial year’s actual recurrent expenditure, with CSR activities limited to no more than 1 percent of consolidated fund allocations for the year.
“The board of directors is hereby urged to accord heightened and strategic attention to such expenditure as an integral component in the pursuit of the organization’s objectives,” Suriyapperuma said in his directive.
“In undertaking such expenditure initiatives, it is vital to ensure that they are fully aligned with, and supportive of, the government’s overarching development agenda.”
“This alignment should be achieved while preserving the institution’s core mandates, thereby promoting a well-balanced approach that advances both organizational objectives, and national priorities.”
“Strengthened coordination in this regard will not only enhance public accountability but also make a meaningful contribution to sustainable, inclusive, and long-term national development.”
The move is expected to address long-standing concerns over unchecked SOE largesse that has ballooned public debt to 114% of GDP pre-2022 crisis, analysts say.
Under the new guidelines, Boards of Directors must justify every request with detailed annexures, including program descriptions, expected outcomes, target audiences, and alignment with SOE objectives.
The circular underscores the non-political, non-personal nature of approvals, prohibiting use of Treasury budgetary provisions for these ends and mandating 30 percent profit-after-tax remittances from previous quarters within two months.
It also requires SOEs to integrate these expenditures into their Corporate Governance Guidelines, focusing on measurable impacts like community development or national priorities, rather than ad-hoc patronage.
The move comes at a time for the National People’s Power (NPP) government, just weeks after a protest rally after the 2026 budget amid discussions over “hidden fiscal leaks,” estimating past SOE CSR excesses at Rs. 50-100 billion annually, diverting funds from debt servicing.
The directive aligns with IMF Extended Fund Facility (EFF) benchmarks for public financial management, following the fifth review’s praise for revenue mobilization but cautions on expenditure controls. (Colombo/November 27/2025)
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