The government plans to reduce financial assistance to state-owned enterprises (SOEs) to MVR 1.98 billion in 2027, continuing efforts to limit the burden of government-owned companies on public finances.
According to figures presented in the proposed 2027 state budget, capital contributions and loans to SOEs are expected to decline from an estimated MVR 2.27 billion in 2026, following a substantial reduction from the record level of assistance provided in 2025.
The proposed allocation reflects the administration’s efforts to strengthen corporate governance, reduce operating costs and limit the financial risks associated with state-owned companies.
Government support for SOEs has long been identified as a fiscal concern, with capital injections and loans placing additional pressure on the state budget.
Budget figures show that financial assistance to SOEs totalled MVR 4.1 billion in 2024 before rising sharply to MVR 6.21 billion in 2025, an increase of approximately 51.5 percent.
The amount is projected to fall to MVR 2.27 billion by the end of 2026, representing a reduction of approximately 63.4 percent compared with the previous year.
The Ministry of Finance has attributed increased financial support requirements to changes in global oil prices, which can affect the operating costs of state-owned companies, particularly those involved in providing essential utility services.
Under the proposed 2027 budget, financial assistance is expected to decline further to MVR 1.98 billion, a reduction of approximately 12.8 percent from the projected expenditure for 2026.
The reduction comes as President Dr Mohamed Muizzu’s administration pursues reforms intended to improve the financial sustainability and operational efficiency of government-owned companies.
As part of these efforts, the government initiated measures in 2026 aimed at reducing the workforce of state-owned enterprises by 33 percent.
The proposed workforce reduction forms part of a wider cost-cutting initiative intended to streamline operations and reduce recurring expenditure across the state-owned sector.
SOEs play a significant role in the Maldivian economy, providing services in sectors including electricity, water, transport, infrastructure development and commercial operations.
However, the financial performance of these companies has remained an important consideration in government budget planning, particularly where continued operations require financial support from the state.
The Ministry of Finance has identified the need to strengthen oversight and improve the management of state-owned companies as part of broader efforts to contain fiscal risks.
Reducing the amount allocated for capital contributions and loans would allow the government to limit direct financial commitments to SOEs, although the long-term impact will depend on the companies’ ability to improve their financial performance.
The proposed 2027 allocation of MVR 1.98 billion would represent the lowest annual level of financial support among the four years covered by the figures, subject to the approval and implementation of the budget.