State Budget Expends MVR 300 Million in Loans to Sustain SOEs

The Finance Ministry has disclosed that the state budget has utilised MVR 300 million in treasury loans this year to address the cash flow needs of state-owned enterprises (SOEs).

The ministry’s report highlights one of the primary challenges faced in stabilising the state’s budget for the current fiscal year: the escalating expenses associated with managing the cash flow of these companies on an annual basis.

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This year’s allocation of treasury loans to government-owned entities marks a significant increase, with an 80 percent rise compared to the past two years and a 60 percent uptick from the previous year. In the preceding year, a sum of MVR 50 million was earmarked for cash flow adjustments, while in 2021, MVR 200 million was allocated for this purpose.

It’s noteworthy that the government currently holds an outstanding balance of MVR 865 million resulting from loans extended to support company budgets, with loans disbursed for various projects amounting to MVR 1.1 billion. 

The largest share of these loans has been issued to entities such as Maldives Airports Company Limited (MACL), responsible for operating Velana International Airport, Urbanco, and Fahi Dhiriulhun Corporation (FDC), primarily for projects related to the airport and housing.

The Finance Ministry has pointed out that the failure to repay these loans and meet the financial commitments of SOEs places a substantial burden on the state budget.

Furthermore, in addition to these financial pressures, companies are also recipients of substantial subsidies. Notably, government-owned enterprises play a crucial role in disbursing fuel and electricity subsidies, alongside various other forms of financial assistance.

According to the Finance Ministry’s report, despite the consistent increase in the expenses of these enterprises, dividends returned to the government remain relatively meagre, with only a few companies adhering to established regulations. 

Thus far this year, government companies have paid MVR 650 million in dividends, representing half of the estimated amount, while they are anticipated to yield a total dividend of MVR 1.1 billion for this fiscal year.

In addition to dividends, these companies also owe substantial sums in taxes to the state, with outstanding fines and tax dues totalling MVR 880 million.