Govt's unpaid bills reach MVR 7 billion, Auditor General tells parliament

Auditor General Hassan Niyazy has raised concerns over the absence of a plan in the proposed 2027 state budget to settle approximately MVR 7 billion in outstanding payments owed by the government and state-owned enterprises.

Speaking at a parliamentary committee meeting on Tuesday to examine the proposed budget, Niyazy said the outstanding amount includes payments owed to state-owned companies and private businesses.

He said the lack of provisions to settle these liabilities in next year's budget was a matter of concern.

"We asked for clarification on how these payments were planned to be settled. We were told that they were not included in the budget. Therefore, Parliament needs to clarify how these payments will be made," Niyazy said.

The Auditor General also questioned whether the proposed 2027 budget would be sufficient to cover expenditure incurred during the final quarter of 2026 if those obligations were carried forward into the following year.

Niyazy said delays in settling payments to private businesses were also affecting tax revenue collection.

He noted that outstanding tax payments owed to the state had reached MVR 22 billion.

According to the Auditor General, one factor contributing to the accumulation of tax arrears is the difficulty businesses face in meeting their tax obligations when the government has not settled payments owed to them.

"One reason these outstanding amounts continue to increase is the difficulties identified by MIRA arising from the government's failure to settle bills owed to various parties," he said.

The Auditor General's remarks come as the government faces questions over its outstanding financial obligations and the adequacy of provisions in the proposed budget to meet those commitments.

The Ministry of Finance and Public Enterprises recently opened a process allowing businesses with long-outstanding government payments to apply for those amounts to be offset against their tax liabilities to the Maldives Inland Revenue Authority (MIRA).

Under the proposed arrangement, businesses that owe more in taxes than the government owes them would have their tax liabilities reduced by the amount of the outstanding government payment. They would then be required to pay the remaining tax balance to MIRA.

Where the government's outstanding payment to a business exceeds the amount of tax owed by that business, the tax liability would be deducted from the government payment, with the remaining balance payable to the business.

The arrangement is intended to address outstanding payments while enabling businesses to settle their tax obligations.

A substantial portion of the government's outstanding payments to private businesses relates to unpaid bills incurred by Fenaka Corporation.

The government has since halted Fenaka's operations and transferred its responsibilities to State Electric Company Limited (STELCO).