Credit to state enterprises surged to 365 billion rupees in December 2013 from 308 billion rupees in November 2013 central bank showed, after coming steadily down from 368.2 billion in July.
Key state borrowers from Sri Lanka's bank in the past included the Ceylon Electricity Board and Ceylon Petroleum Corporation which in turn gives credit to the CEB to run losses and subsidize energy.
Thermal energy generation from imported fuel has risen sharply over the past few months as a drought worsened in the island, reducing hydro generation and pushing up generation costs.
Critics have said that energy subsidies are a key deceptive tactic practiced upon the people by Sri Lanka's elected ruling class.
State enterprise losses which are financed by bank debt requires higher interest rates to crowd out private investment and slow growth, but the state usually prints money to keep interest rates down, triggering high inflation and currency depreciation.
Sri Lanka's rulers gained the ability to print money after a central bank was created in 1950 to join the failed Bretton Woods system of unstable soft-pegs.
The subsidy deception hurts the poor most - who consume the least amount of energy -by destroying the real value of their salaries and meager bank deposits though currency depreciation and inflation.
In 2004 market pricing of energy was abandoned under pressure from the Janatha Vimukthi Peramuna and the Sri Lanka Freedom Party two influential factions of the elected ruling class, ending three years of low inflation and currency stability.
Subsequent energy subsidies and triggered several episodes of balance of payments pressure and also led to a losses through petroleum subsidies.
In 2012, after the latest balance of payments crisis, energy and petroleum prices were raised amid stiff opposition by the United National Party, the second largest faction of the elected ruling class which had brought in energy market pricing and low inflation after a balance of payments crisis in 2000.
SOE's are able to run persistent large losses because state banks which under the control of the elected ruling class continue to channel savings collected from the people despite their finances weakening steadily.
Heavy SOE losses borrowings keeps lending rates high, diverts savings to unproductive consumption spending reducing national savings, hurting future employment and growth.
In December however borrowing from banks by the central government fell by 24.2 billion rupees to 1,301.3 billion rupees, helping cushion the impact of SOE borrowings.
Private sector borrowings also fell to 15.3 billion rupees from 22.3 billion rupees. But borrowings by private power producers can go up when the CEB delay payments.
Data shows that in 2013, the central government borrowed 256.1 billion rupees from commercial banks, and SOE's 72.6 billion rupees, and private business 175.9 billion rupees.
In January Sri Lanka borrowed a billion US dollars in international markets which has helped keep interest rates low.