The State Trading Organisation (STO) is bankrupt, President Abdulla Yameen revealed at a rally in Hulhumale on Friday night, according to local media reports.
The state-owned STO is the country’s primary wholesaler, responsible for bringing in the vast majority of basic foodstuffs such as rice and flour, as well as other imported commodities such as electrical goods.
It also imports the vast majority of the Maldives’ oil, used to fuel fishing and transport vessels, diesel generators, air-conditioners and water desalination plants.
The STO sparked fears of an impending oil shortage crisis in early November, after then Managing Director Shahid Ali warned the company would run out of oil as early as November 10 if it did not pay some of its US$20 million debt to suppliers.
Shahid told an emergency meeting of parliament that government-owned companies had failed to pay the STO the almost US$40 million it was owed, and appealed to the central bank to use the foreign currency reserves to bail it out of its debt.
Central bank governor Fazeel Najeeb meanwhile warned that currency reserves were dwindling, and the state was on the verge of having to print money.
Speaking during Friday’s rally, President Yameen said “not only does STO not have dollars, it does not have Maldivian Rufiyaa either. Funding the oil import through STO is now a burden for the state.”
“I checked today where STO is now. By the time I left STO, the company had developed many commercial projects and STO was making MVR 154 million in profit. Today, STO is bankrupt. I am telling you, it is bankrupt. STO does not have money,” said Yameen, who chaired the organisation during the rule of his half-brother, Maumoon Abdul Gayoom.
Impact
The tourism industry is generally insulated from Maldives’ financial woes by virtue of operating a separate dollar economy – a practice technically illegal under the country’s monetary regulations, but which reduces the industry’s exposure to the rufiya as well as rendering it unexchangable and creating a foreign currency shortage for local people.
However the tourism industry – indirectly responsible for up to 70 percent of the country’s GDP and up to 90 percent of its foreign exchange – is unable to import oil and other commodities independently and therefore is exposed to any supply shortages experienced by local suppliers of commodities such as oil.
In June 2013 resort operators and businesses across the country were forced to dramatically alter menus and even temporarily close entire restaurants after weeks of disruptions to the supply of Liquefied Petroleum Gas (LPG).
The general manager of one property told Minivan News at the time that the LPG shortage had created a “food and beverage nightmare” that lasted three weeks, while some restaurants in Male were forced to temporarily close.
One of President Yameen’s early acts in office was to replace Shahid Ali as head of the STO with Adam Azim, brother of Defence Minister Mohamed Nazim.
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Apparently paying debts to oil suppliers is less important than wasting money on having the same election unnecessarily repeated multiple times just so he could win. Shame, Yameen. Shame.
@Rihakuru
Totally agree !
WOW - the chain reaction is only starting.
Public companies should not be run by political appointees like Shahid Ali - exMD of STO. Despite so many accumulated political debts of STO in his term, he has remained silent till removed from job. He is complicit
A true professional would have raised the issues and left the job
Oh look, the MDPians out in full force ready to criticize anything President Yameen tries to change.
He is the only person that is capable of running a country like Maldives. Anni is more concerned about trying to promote his international image as an Eco-Warrior.
Let the bitterness run through your veins.
Not only STO the whole country is bankrupt.
The country has no foreign reserves. Yamin is talking about natural resources....what a load of BS.
What about developing Acqua culture projects and building up GOLD reserves etc. There are a few things the country can thrive on.
Before Yameen gets carried away with all the praises from his new found fans, let's remind ourselves of reality. STO is owned millions of dollars (billions of Rufiyaa) by the state itself! The government and companies operated by it treat STO as a cash machine to withdraw money anytime they like. Small wonder then STO is bankrupt. One can never run a business like that. Imagine a father running his business, and all his children just helping themselves to the cash till. That's the story of STO. No matter who's appointed as MD, CEO, Secretary, Janitor or cleaner, nothing is going to change until you cut away the hand of the state in STO's till.
Though not reported here, Yameen also boasted about his skills in reshaping STELCO. Ever wondered how Jangiyaa Nazim became a tycoon overnight? See the connections? Yeah, Yameen overhauled a lot more than STELCO!
You can see where Yameen is headed.
Captain Maldives. STFU. You add no value.
Captain Maldives,
I thought Waheed and company left you a healthy, robust economy? They claimed to have got it all back on track over the last 2 years, well done!
Yellow fever people had tried to manipulate the election with the help from EC but you miserably had failed to do so.
Don't think that Maldivian are only member of MDP and Nasheed and majority of Maldivian never want Nasheed as our leader and we have shown and prove this through ballot papers.
MDP had never been able to win any election after 7th Feb. 2012 and this is another proof.
Those who had votes on bi-elections are not bangalish and they were also Maldivian.
Digest this fact
Hero, PPM got 1% more of the total vote than MDP. Yes, it's a victory but not really considered overwhelming support. If Maldivians never wanted Nasheed, then why did he consistently get 46-49% of their votes? Even when running against multiple candidates. You need to learn how to digest facts.
One question >>>where did the money go ??? I think most Maldivians know !!!