Adhadhu has learnt that the government is considering liquidating and selling off some state-owned companies as part of its efforts to cut government expenditure.
A reliable source said the government is preparing to take major decisions related to state-owned companies after the cabinet recently held discussions on a paper prepared by the Finance Ministry.
One of the companies to be liquidated is the Maldives Sports Corporation. The Sports Corporation was established in 2016 under the Sports Act and is a 100 percent state-owned company.
The law states that this company must operate on its own income after the first three years. However, the company is still operating from the state budget. The Sports Act must be amended to dissolve the company.
The government is also considering other companies that are not profitable and do not provide adequate services.
Although the government has not yet decided which companies are to be sold off under the privatization process, companies that are under consideration include companies that rely on the state budget and companies that make profits. The government is considering selling off the companies, selling shares to the public and changing the companies under the public-private partnership model.
International financial institutions have always recommended privatization and restructuring of state-owned companies to ease the budget burden. The main issue is that the companies do not generate enough revenue after receiving budget support and the government has to repay the debt taken to run the projects.
The Ministry of Finance under the former government also worked to achieve this. The budgets passed earlier in the term required the privatization of companies to raise revenue. However, the government later changed the decision and decided not to sell any of the companies.
According to the Finance Ministry's 2022 budget, there are 32 state-owned companies, of which 13 are receiving capital assistance, subsidies and grants. Of these companies, 10 pay dividends regularly.
