SOEs instructed to cut expenditure on salaries and halt promotions

The Privatization and Corporatization Board (PCB) has instructed State-Owned Enterprises (SOEs) to implement significant cost-reduction measures in order to mitigate the economic impact arising from the ongoing conflict in the Middle East.

In a circular addressed to SOEs and their subsidiaries, the PCB directed these entities to take all necessary actions to reduce expenditures related to employee salaries and benefits. The directive further states that operational activities must be organized to be completed within official working hours, with overtime strictly limited to essential tasks that cannot be carried out during regular hours.

Key measures outlined in the circular include:

• The immediate suspension of staff promotions, with recruitment restricted solely to essential roles required to maintain core operations, even where such positions fall within the organization’s approved administrative structure
• The implementation of all necessary measures to ensure sustainable cash flow management and to address salary-related expenses in light of current economic risks
• Ensuring that organizational spending is limited strictly to essential costs required to fulfill mandates and responsibilities as defined in the company’s articles and memorandum of association
• Conducting assessments of the potential economic impact of the Middle East conflict and prioritizing actions that minimize the financial burden on the public
• The cancellation of non-essential ceremonies and events, while encouraging companies to share resources for necessary functions and reduce associated costs

These directives follow an earlier circular issued by the PCB on March 30, which introduced additional austerity measures, including:

• The suspension of all non-essential official overseas travel
• The reduction of international travel through the use of online platforms to communicate with global customers and suppliers
• The prohibition of business class travel for essential official overseas trips
• The minimization of company expenses for trips fully funded by external parties
• The suspension of overseas training programs in favor of online participation

This circular comes despite President Dr. Mohamed Muizzu’s earlier assurance that no further cost-cutting measures would be implemented following the conclusion of the elections.

In addition to the PCB’s directives, the Finance Ministry has also called for reductions in expenditure due to the Middle East conflict. As a result, several state institutions and enterprises, including the Maldives Industrial Fisheries Company (MIFCO) and the Prosecutor General’s Office, have already begun implementing such measures.