Male’, Maldives – National Debt Report complied by the parliament has shown that the national debt of Maldives adds up to a whopping MVR 172 billion.
The committee to investigate national debts formed with the whole parliament presented the report to the parliament today. While presenting the committee report, chair of the committee, Speaker of Parliament, Former President Mohamed Nasheed said that this figure was reached while investigating the debts incurred between 2012 and 2018 were lawful and that most of the debts incurred were according to the constitution.
However two debts which have been incurred have been flagged as unlawful in the committee report. Speaker of Parliament, Former President Mohamed Nasheed said that these two debts were incurred due to activities carried out on July 14, 2016, May 31, 2017 and July 16, 2017.
The committee had highlighted seven different types of debts which have been taken by the government. These are;
- Loans taken from other governments: MVR 13 billion from 49 loans
- Loans taken from international organizations: MVR 12.9 billion from 124 loans
- Government guarantee given to State Owned Enterprises (SOE): MVR 41 billion from 114 loans
- Outstanding bills of government and SOE’s: MVR 5.4 billion
- Overdrafts by SOE’s: MVR 78 billion
- Loans, Treasury Bills and Bonds by MMA: MVR 7.4 billion
- Treasury Bills and Bonds sold by government to other parties: MVR 91.9 billion
Speaker of Parliament, Former President Mohamed Nasheed also added that debts become an issue to the state when it’s not paid and that the issue in hand was that the amount to be paid back in 2021 is too much.
The report also highlighted that the loans were taken by the government at concessional rates, but the USD 250 million sovereign bond named “Sunny Side Bond” sold in 2017 to raise funds for the important projects planned by the government was taken at a seven percent interest rate and the repayment has to be made in 2022. The committee report had recommended to re-profile this bond to lower the burden on the state.
In addition to this, the amount which government had incurred in arranging guarantee for debt servicing of the previous debt servicing totals up to MVR 10.2 billion in 2019 and until 2020 a total of MVR 9.1 billion would be spend on this amount according to the committee report. Within these amounts 70 percent of debt service amount for 2019 and 66 percent of the debt service amount for the year 2020 is for the government guaranteed debt servicing as SOE’s which incurred the original debt had failed to pay.
As the debt servicing is increasing compared to the income of the state, due to the expected income drop of 49 percent of the estimated budget, the ratio of debt servicing to income would increase drastically this year. One of the main issues being faced now is due to the debts taken in foreign currency had increased and to mitigate this, the government needs to lower its expenditure and lower the fiscal deficit according to the report. In addition to this the government needs to work on maintaining national debts at manageable levels. The government has planned to spend a total of MVR 10 billion on paying back dept in the last quarter of this year.