Maldives to merge 3 govt companies including RACL, FDC

The Maldivian government is set to take steps toward restructuring its state-owned enterprises (SOEs) as part of a broader effort to improve financial stability and enhance economic efficiency.

During an upcoming cabinet meeting on Sunday, discussions will centre around the merger of six SOEs, according to President Mohamed Muizzu.

In a video message released ahead of the meeting, President Muizzu outlined three major decisions aimed at reforming the country’s SOE landscape. These include:

These moves follow last week’s cabinet decision to make Fenaka Corporation, a debt-ridden state utility, a subsidiary of the State Trading Organisation (STO).

In addition to the SOE mergers, President Muizzu revealed that the cabinet will also explore the introduction of an investor residency programme. This initiative is part of the government's strategy to diversify the economy and attract significant foreign investments.

The mergers and restructuring of loss-making SOEs under more profitable counterparts form a critical component of the administration’s austerity measures aimed at improving state cash flow. These efforts are accompanied by a series of cost-cutting and revenue-boosting initiatives, including legal reforms to the national healthcare scheme (Aasandha), the introduction of targeted subsidies, and a mandate for companies earning US dollar revenues to pay taxes in US dollars.

The urgency of these measures is underscored by the country’s escalating external debt obligations. In light of these financial pressures, Fitch Ratings recently downgraded the Maldives' credit rating from ‘CCC+’ to ‘CC,’ indicating an increased risk of default and highlighting the challenging economic environment facing the nation.