Government spending on state-owned enterprises has surpassed the budgeted figure by MVR 865 million, according to the latest weekly fiscal development report released by the Finance Ministry.
The budget allocation for state investments on SOEs this year is MVR 378 million.
But the fiscal development report released on Tuesday night shows the government has already spent MVR 1.24 billion as of August 28 – marking an excess of MVR 865 million or 229 percent.
Spending on SOEs had also exceeded the budgeted figure last year, hitting MVR 1.23 billion as of August 28, 2024.
Persistently high spending by SOEs, as well as mounting debt and unnecessary appointments for political purposes, have become a huge burden on the state budget over the years. The incumbent People’s National Congress (PNC) administration had included reforms to address the issue in the 2025 budget, including the merger of some SOEs and the dissolution of others. However, some of these plans were later dropped.
The administration had also dropped plans to reform subsidies and pension – two other areas which have become an increasingly huge burden on the state over the years. In May, President Dr. Mohamed Muizzu said his administration now plans to cut costs by changing how projects are run and awarding government contracts to SOEs instead of private contractors.
President Dr. Mohamed Muizzu (L) and Finance Minister Moosa Zameer (R). (Photo/President's Office)
The government later awarded hundreds of contracts to SOEs, including ones that do not fall under the mandate of the companies. This includes the award of hospital construction projects to the Road Development Corporation (RDC), school construction projects to Fahi Dhiriulhun Corporation (FDC), and outdoor gyms to Maldives Airports Company Limited (MACL).
While the government has been touting a drop in overall government expenditure, numbers released by the Finance Ministry shows this is mainly due to a significant drop in spending on infrastructure development projects, with capital expenditure down at MVR 3.12 billion – which is just a quarter of the budgeted MVR 12.6 billion.
As Maldives struggles with staggering external debt obligations, the numbers also show the government has already spent beyond the budgeted figure on loan repayments. The government has already spent MVR 3.95 billion on loan repayments, which is beyond the budgeted figure of MVR 3.87 billion.
 Meanwhile, the country has only received eight percent of projected grants.
 The Maldives has been receiving urgent appeals by international financial agencies – including the International Monetary Fund (IMF) and the World Bank - to cut down costs and expedite the implementation of fiscal reforms, especially those targeting salaries, pension, and subsidies. However, these costs continue to increase.
The government has repeatedly expressed confidence in being able to cut down costs in other ways and overcome the current economic crisis.