Recent data from the first quarter of 2024 highlights the ongoing struggles of SOEs. Of the 30 SOEs in the Maldives, 14 reported operating at a loss during this period.
Corporate Maldives
The Government of the Maldives has been actively addressing the challenges faced by State-Owned Enterprises (SOEs), with a major focus on reducing their reliance on government funding and enhancing their financial sustainability. A series of reforms have been implemented in recent weeks, including the merger of key enterprises such as FENAKA Corporation with the State Trading Organisation (STO) and Fahi Dhiriulhun Corporation (FDC) with the Housing Development Corporation (HDC). Additionally, several entities, including the Maldives Integrated Tourism Development Corporation (MITDC) and AgroNet Maldives, have been dissolved as part of the government’s efforts to streamline operations. Despite these efforts, much remains to be done to ensure the long-term profitability of existing SOEs.
Recent data from the first quarter of 2024 highlights the ongoing struggles of SOEs. Of the 30 SOEs in the Maldives, 14 reported operating at a loss during this period. This signals a pressing need for more robust financial models to reduce the burden on state finances. In just the first quarter of 2024, the Maldivian government allocated MVR 1.2 billion from the state budget to support these enterprises, a figure that raises concerns about sustainability amid the country’s significant debt crisis.
According to statistics from the Privatization and Corporatization Board (PCB), the largest portion of this spending was directed toward subsidies for SOEs. A total of MVR 1.2 billion was disbursed as subsidies, along with MVR 60 million in direct aid and MVR 164 million in capital injections. This marks a 9% increase in expenditure compared to the first quarter of 2023.
The figures from PCB also shows that the Housing Development Corporation (HDC) was the biggest recipient of subsidies, receiving MVR 400 million, followed by STO with MVR 360 million and FENAKA with MVR 250 million.
Additional expenses also included spending MVR 84 million on HDC to cover administrative expenses, while Road Development Corporation (RDC) was allocated MVR 24 million, and Maldives Fund Management Corporation (MFMC) received MVR 28 million as well
These figures published by PCB showcases the significant financial outlay required to sustain the country’s SOEs. As the government moves forward with its reform agenda, achieving financial independence for these enterprises is critical to reducing state expenditure and ensuring long-term economic stability in the face of rising national debt.
