Spending on SOEs hit MVR 1.2bn as dividends see MVR 109mn dip

Government spending on state-owned enterprises has surpassed the annual budget allocation by MVR 865 million, while dividends from these companies declined by close to MVR 109 million, according to the latest weekly fiscal development report released by the Finance Ministry.

Persistently high spending by SOEs, as well as mounting debt and unnecessary appointments for political purposes, have become a huge burden on the state budget over the years. The incumbent People’s National Congress (PNC) administration had included reforms to address the issue in the 2025 budget, including the merger of some SOEs and the dissolution of others. However, some of these plans were later dropped.

The budget allocation for state investments on SOEs this year is MVR 378.3 million.

But the fiscal development report released on Sunday shows the government has already spent MVR 1.2 billion as of September 4 – marking an excess of MVR 865.2 million. It is also MVR 14 million higher than during the same period last year.

In contrast to the high spending, dividends earned by the state from SOEs show a decline.

The state had projected MVR 709. 9 million in dividends from SOEs this year.

But the fiscal report shows the state collected MVR 463.7 million or 60 percent of the budgeted figure in dividends from SOEs as of September 4. This marks a decline of MVR 108.9 million compared to the same period last year.

President Dr. Mohamed Muizzu’s cabinet had announced the decision to merge several SOEs, including Housing Development Corporation (HDC) and Fahi Dhiriulhun Corporation (FDC), as well as Maldives Airports Company Limited (MACL) and Regional Airports Company Limited (RACL), back in September last year.

It also decided to dissolve Maldives Integrated Tourism Development Corporation (MITDC) and Agro National Corporation (AgroNat).

While the merger of RACL into MACL is in progress, the merger of FDC into HDC has been put on hold amid concerns the move would only add more liabilities to the books of HDC, which is already carrying a high debt.

Meanwhile, the dissolution of MITDC and AgroNat has yet to be initiated.

The Maldives has over 30 SOEs, including 22 100 percent state-owned ones. Many of these companies operate at a loss.

The SOEs were collecting a staggering MVR 125 billion in debt at the end of 2023, including MVR 12.67 billion in sovereign-guaranteed loans. The debt-to-asset ratio of companies most heavily in debt, such as HDC and MACL, was above 50 percent.

SOEs, which have long been accused of being used by different administrations to offer jobs in exchange for votes, employ over 34,000 people.