COLOMBO: Sri Lanka’s leftist government said on Tuesday it was selling a failed hotel project, marking its first privatisation move in line with an IMF bailout.

Government spokesperson Nalinda Jayatissa said the cabinet had agreed to revive the previous administration’s stalled process “of disposing of shares in Canwill”, a fully state-owned company established in 2011 to operate hotels.

The sale of Canwill marks the first major privatisation under the government of President Anura Kumara Dissanayake, a self-avowed Marxist. Jayatissa told reporters the government had decided to retain Deloitte, a leading professional services firm, to manage the sale.

The government said Canwill, with an issued capital of $61 million, needed at least another $120 million to complete its 47-storey, partially built, 458-room beachfront hotel in Colombo.

With no prospect of raising the capital to complete the project, the new administration decided to divest the asset instead. The company also owns another beach property in the south of the island.

The International Monetary Fund, which extended Sri Lanka a $2.9 billion loan in early 2023 after the country defaulted on its $46 billion foreign debt in April 2022, had urged reforms of loss-making state-owned enterprises.

Dissanayake had previously been reluctant to sell state assets, instead promising to revive unprofitable government-owned firms through improved management. However, since winning the presidency in September, Dissanayake has made a U-turn on his pledge to renegotiate the terms of the unpopular IMF bailout agreed by his predecessor.

He has retained the high taxes imposed by the previous administration and agreed to remove subsidies on fuel and electricity. The IMF bailout programme requires the government to reform 52 state-owned enterprises that are straining the national budget.

Published in Dawn, May 28th, 2025