The World Bank said that state-owned enterprises pose a risk to the Maldivian economy.
“Maldives Public Expenditure Review” published by the World Bank that highlighted that SOEs possess adverse risks to the revenue and overall expenditure of the government.
The report stated that increase in capital payouts and repayment payouts to these companies in addition to the low revenues generated by the companies may reflect terribly on the government’s cash flow.
Although SOEs play a somewhat significant role in the growth of a developing country, in the case of the Maldives, the significance of SOEs are extremely profound. Henceforth, the World Bank estimates for state owned companies to share closer to ten percent of the GDP.
Excluding resort employees, 12 percent of the working population of Maldives are employed at SOEs. The World Bank reported this number to be at 21,000 of the working population.
Fiscal Risks estimated at USD 2.5 billion
The World Bank asserted that fiscal risks, estimated at USD 2.5 billion or MVR 38.5 billion. This constitutes 45 percent of the GDP of Maldives.
The World Bank assumes that these risks stemmed from guaranteed and on-lent loans of USD 1.6 billion or MVR 24.6 billion, and trade payables, subsidies and capital injections granted to SOEs of over USD 859 million or MVR 13.2 billion.