State spends MVR 300M on treasury loans to bump SOEs

The Ministry of Finance has revealed Maldives government has spent nearly MVR 300 million from 2023 fiscal budget on treasury loans to facilitate cashflow management of state-owned enterprises (SOEs).

The ministry reported that the state faced significant challenges in budget management owing to high expenditure towards SOEs to adjust their cashflow for operations.

The treasury loans issued so far in 2023 is an 80 percent increase compared to the last two years and a 60 percent increment compared to the year before.

In 2022, the government issued MVR 50 million in treasury loans to balance cashflows of SOEs while in 2021, the state issued MVR 200 million.

As of now, the state has MVR 865 million in receivables from SOEs for the treasury loans, while another MVR 1.1 billion was spent to execute various projects by public companies.

Government issued the most number of loans to Maldives Airports Company Limited (MACL), Urbanco, and Fahi-Dhiriulhun Corporation (FDC) for initiatives related to airport development and housing, respectively.

The ministry said that the government faced challenges in its budget management due to the delays in the repayment of loans issued for projects or state-guaranteed loans.

In addition to treasury loans, the state allocates a substantial amount in subsidies for various State-Owned Enterprises (SOEs). The government provides subsidies for fuel and electricity through the relevant SOEs.

The ministry's report highlighted that contrary to the significant expenditure on SOEs, the state generates comparatively less revenue from the public companies in dividends.

Additionally, the ministry observed that only a few companies complied with the regulations by paying dividends.

The government has generated MVR 650 million in SOE dividends in 2023, constituting 50 percent of the projected revenue for this year.

The 2023 state budget projects an annual total of MVR 1.1 billion in SOE dividends.

Additionally, several State-Owned Enterprises (SOEs) owed significant amounts in taxation to the state. The ministry reported that SOEs owed MVR 880 million in taxes.