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In the past week several reports have appeared in the newspapers that members of the Ceylon Bank Employees Union (CBEU) are planning trade union action against the government's plans to privatise the state-owned banks. The protests are planned for working hours in the form of a go-slow, picketing and processions, according to these reports. They may also escalate into full-blown strikes.

The CBEU is one of the country's biggest unions and is generally perceived to be apolitical. The CBEU strike is significant because of this factor.

This is because other protests against privatisation have had political overtones as they have been spearheaded either by the Janatha Vimukthi Peramuna-linked unions or by other bodies with associations to the opposition political parties.

As we have said in these columns before Sri Lanka has to settle the debate regarding privatisation sooner rather than later. If there is political will behind wholesale privatisation, then let it be so. Otherwise a macro-economic policy that will deal with the problems at hand without resort to privatisation of state enterprises would have to be chalked out, with of course, the agreement of the multi-lateral lending agencies who have such a strong say in our policy-making these days. It is very important that the country carries out privatisation measures not merely for the sake of raising cash for the empty Treasury. Handing over existing assets and institutions to the private sector is a serious matter and has to be done with care.

Selling off loss-making corporations to augment government funds is a knee-jerk response to a failing economic situation. Instead privatisation must be introduced as a serious part of national policy. There are encouraging signs, particularly from the government, that this policy of overarching change is being implemented. Two recent examples are the telecommunication sector where the critical international gateways were opened to private providers and the other is the petroleum sector where a third service provider is being invited to enter the Sri Lankan market.

Both measures will have far-reaching implications providing stability to these vital sectors of the service economy and eventually benefiting the consumer who will get a better service at a more competitive rate.

This brings us back to the banks, where privatisation has become a thorny problem. With regard to the People's Bank, the second biggest of the state banks, it has been known for some time that the institution is in trouble. Bad loans have climbed and various inefficiencies have made it almost unviable.

Recognising that fact the Board of the bank has already resolved to privatise this institution, although the government is yet to take a final decision.

If the aim of the government is to make the People's Bank profitable and efficient, privatisation is not the only answer. It may be possible to revamp the bank after warehousing non-performing loans. However solving the more serious problems faced by the banks cannot be done through such a revamp while it is still in government hands. The most serious problem faced by the People's Bank and the Bank of Ceylon are the huge non-secured loans given out to political favourites of all the main political parties over the years. This has proved to be a massive burden on the banks and has sucked away profits. Will government administrators have the guts to go after the defaulters linked to the ruling party? Or will they prosecute only the oppositionists?

At the same time, it has to be accepted that most state institutions are overstaffed and unionised or not workers may have to be retrenched to make the banks smoother and more cost-effective. It will certainly be easier for a set of private sector managers to take hard decisions such as these rather than government ministers.

The world over it has been proved without reasonable doubt that few politicians will take unpopular decisions as would have to be if a revamp is to be done. Therefore there are powerful reasons for privatisation of the banks, and if the striking workers can think of a better way to solve these problems and save national institutions we are hard-pressed to see another way.

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