Government Injects MVR 10.4 Billion into State-Owned Enterprises through Lending

  • Maldives
  • World
  • Business
PUBLISHED 01 July 2023

At the conclusion of last year, the Maldivian government's lending to State-Owned Enterprises (SOEs) reached a staggering MVR 10.4 billion, significantly impacting the nation's increasing debt burden, according to recent statistics released by the Ministry of Finance.

The Maldives Airports Company Limited (MACL) emerged as the largest beneficiary, with an outstanding subsidiary loan of MVR 7.7 billion. This significant sum was provided by the government to facilitate the development of Velana International Airport. Urbanco, another prominent SOE, secured the second-highest subsidiary loan of MVR 1.2 billion. These funds were allocated by the government to support various housing projects undertaken by Urbanco.

Among the other listed SOEs, Fenaka holds an outstanding subsidiary loan of MVR 440 million, while State Electric Company Limited (STELCO) has an outstanding loan of MVR 388 million. Island Aviation and the Maldives Transport and Contracting Company (MTCC) owe MVR 327 million and MVR 140 million, respectively, to the government in subsidiary loans.

Notably, the government has extended subsidiary loans to key financial institutions as well. The Maldives Monetary Authority (MMA) received MVR 90 million, while the Bank of Maldives (BML) secured MVR 26 million in loans.

These substantial financial commitments to SOEs and financial institutions form a significant portion of the state's expenditure. The government has allocated subsidies and extended subsidiary loans as means of support.

However, the substantial lending has contributed to the country's mounting debt, with the current state debt standing at MVR 108 billion. This debt comprises MVR 49 billion in external debt and MVR 59 billion in domestic debt. Loans acquired through government guarantees amount to MVR 16 billion. Alarmingly, the total debt represents 113% of the country's GDP, surpassing the threshold set by the International Monetary Fund (IMF) by 50 percentage points.

The Maldives faces the pressing challenge of managing its national debt as it strives for financial stability and sustainability in the long run.