Gulhifalhu reclamation loan to be paid back with MVR 500 million interest

Agreement signing ceremony of the gulhifalhu reclamation project | Finance Ministry

Malé, Maldives – The USD 101 million (MVR 1.6 billion) loan taken by the Maldives government for the reclamation of Gulhifalhu-Phase II will have to be paid back with 6 percent interest.

Data published by the Public Accounts Committee of the Parliament revealed the details of the agreement which was signed on June 6th, including the number of banks the loan was taken from.

As such, it is now known that the loan was taken from three banks; European Export Trade Bank, Netherlands ABN Amro Bank and ING Bank.

While the total amount to be repaid of the loan now stands at USD133 million (MVR 2 billion), which is an additional USD 32 million (MVR 500 million) of the initial loan amount. Of this, the interest alone amounts to USD 16.2 million (MVR250 million).

Other financial costs include, 0.75 percent of the total loaned amount as management fee, 0.45 percent as commitment fee and USD 40,000 (MVR 600,000) as agency fee. Additionally, the loan was taken with a CIR interest rate of 1.2 percent.

The loan repayment period is 10 years, with a grace period of one year and six months.

With USD 133 million to be repaid, the total interest amount is roughly at 6 percent.

The Gulhifalhu reclamation project is one of the largest projects of the current government, where land reclaimed will go towards domestic allocation and a business port.

The current government has so far taken MVR 38 billion in loans, with Maldives Monetary Authority (MMA) estimating the national debt to go up to as high as MVR 103 billion by the end of this year. This is 112 percent of the GDP. However, half way into the year, national debt now stands at MVR 99 billion.