The state has approved approximately MVR 300 million in treasury loans so far this year to meet the cash flow requirements of state-owned enterprises (SOEs), the Ministry of Finance has said.

According to the ministry’s Statement of Fiscal Constraints, one of the biggest challenges in managing the early budget had been the increasing cost of managing the cash flow requirements of SOEs year-on-year.

Treasury loans to SOEs this year were 80 percent higher than in the previous two years and 60 percent higher than in the two years prior to that. In 2022, the budget allocated MVR 50 million to assist in cash flow, whereas in 2021, MVR 200 million had been allocated, the ministry said.

The government is currently owed MVR 865 million from loans issued to SOEs as budget support. The total loan disbursement for SOE projects stands at MVR 1.1 billion, with the most significant amounts issued to Maldives Airports Company Limited (MACL), Urbanco, and Fahi Dhiriulhun Corporation (FCD). MACL, which operates Velana International Airport (VIA), has chosen to distribute record-high annual bonuses to staff over the past two years.

The ministry has expressed concern over the non-repayment of loans and guarantees by government-owned companies, stating that it places a heavy burden on the state budget. SOEs are also the beneficiaries of large government subsidies, with fuel and electricity being subsidised through government-owned companies.

Despite the yearly increase in SOE expenses, dividend payouts remain minimal, with fewer SOEs adhering to proper payout procedures, the ministry said. SOEs have paid out MVR 650 million in dividends this year, approximately half the estimated amount. Additionally, SOEs also owe MVR 880 million in unpaid fines and taxes.