The Maldives cabinet is expected to discuss on the merger of six state-owned enterprises; one of the most important economic sustainability initiatives of the current government aimed at reducing the bleed-out of state funds.
The cabinet will convene a meeting on Sunday, September 01, 2024, as per Maldives President Dr. Mohamed Muizzu.
In a video message, ahead of Sunday’s cabinet meeting, the Maldives head of state said the cabinet will discuss on three key decisions as part of the SOE reformation efforts, which include:
- Merger of Regional Airports Company Limited (RACL) with Maldives Airports Company Limited (MACL)
- Merger of Fahi Dhiriulhun Corporation (FDC) with Housing Development Corporation (HDC)
- Merger of Maldives Fund Management Corporation (MFMC) with Business Center Corporation (BCC)
While the state is gearing up for the merger of six companies by integrating three of the less financially inclining companies with the more profitable ones, the cabinet last week decided to make Fenaka Corporation a full-subsidiary of State Trading Organization (STO).
The Sunday’s meeting will also include discussions about introducing an investor residency program aimed towards increasing economic diversification efforts in the Maldives.
As per the most recent update from the Privatization and Corporatization Board (PCB) on the financial performances of the SOEs, majority of them had turned in losses so far in 2024; with a handful of them on the profit-bearing spectrum.
The current government intends to merge these loss-bearing SOEs as subsidiaries of financially profitable SOEs, which is aimed at reducing the expenditure bleed out from the government made as subsidies, grants and fund injections. Another key reason is to reduce the number of budget-dependent SOEs and increase self-sufficient ones, that would in turn, generate revenue to the state in dividends and interests.
The move appears to be more imperative now following the recent ratings downgrade by Fitch Ratings. Maldives’ credit rating, which was earlier downgraded from ‘B-‘ to ‘CCC+’ was recently downgraded to ‘CC’, in like of Maldives’ economic conditions inching closer to default.