The head of the Maldives’ central bank, Fazeel Najeeb, has warned parliament that the country’s gross state reserves will drop to US$310 million in two months due to outstanding debts.
The statement by the governor of the Maldives Monetary Authority (MMA) follows confirmation from Finance Minister Abdulla Jihad this week that the government had suspended new development projects due to shortfalls in revenue, and was in the process of drawing up a supplementary budget.
“This is not a healthy level. The existing amount is equivalent to that needed for imports of the next two months. The best practice is to have funds for imports needed for six months,” local media reported Najeeb as telling parliament’s finance committee.
The government trying to address the problem by selling bonds to foreign countries, he said, noting that the overdrawing of the state account was “common” as a result of cash flow constraints.
He dismissed rumours that the MMA had recently frozen the state’s current account, but said there were ongoing discussions to increase the state’s overdraft limit from MVR 140 million (US$9 million) to MVR 200 million (US$13 million).
Earlier this month, India’s Financial Express publication reported that Axis Bank had initiated an arbitration process to recover US$160 million in loans granted to infrastructure developer GMR, which were guaranteed by the Finance Ministry during the former administration.
The developer was given a seven-day eviction notice late last year after the new government declared that its 25 year, $US$511 million contract to upgrade and manage Ibrahim Nasir International Airport (INIA) was ‘void ab initio’ (invalid from the start).
The Attorney General (AG’s) Office at the time denied receiving any notice of arbitration from Axis Bank.
Maldivian President Dr Mohamed Waheed meanwhile told a rally on Thulusdhoo last Saturday that there was no cause to worry about the budget or rumours of impending bankruptcy.
“The Maldivian economy is not really that bad,” he declared.
However, the president acknowledged that as a consequence of deficit spending financed by loans, the government had to spend an amount almost equal to the state’s wage bill on interest and loan repayments.
“We Maldivians are not indebted to anyone. We are proud people. We pay back what we borrow. We don’t have any outstanding payment, to any party,” Dr Waheed said in his speech, according to the President’s Office website.
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The Maldives economy is not that bad???? really. so how come so many unemployed youth. And drugs and desperation.
And the only solution that Governor could think of is reducing civil service (which happen to blame Waheed) and increasing unemployment further.
Governor insults Maldivains intelligence yet again! How nice.
Why not take a voulnatry cut in own salary. Even lease the huge MMA building in the most prime business location for actual income generating purpose.
Where are all those 'surprisingly biiiiiiiiiiig" investments Kaalhu Waheed has been trumpeting about? LOL!! Trying to pull the wool over the Maldivians eyes again, eh Waheed?
need to print more Rufiyaa dho! Course. Yes
This country was put on disaster by nasheed and waheed had managed to stabilize the economy
This will be hard to digest by the nasheed and victims of nasheed.
Tourists are cancelling or not booking after hearing how female victims of sexual assault are being flogged in public - if you think it's bad now, what's it going to be like when your toursism industry collapses?
reach 300 million? is it increasing to 300 million? the heading is so misleading!
Really, Mode? Cancelling all new development projects and cutting down on the services to our people is stabilising the country?
You need to seriously get an education. It looks like you are suffering from frog in the well syndrome.
Mode had said it well.
Fact is Nasheed had ruined the economy and he never had any solid economic policy and just kept on bull shitting .
If he knows any thing about economy, he would have burrowed millions of dollars on commercial interest rates just manage the recurrent expenses .
There was nothing he had done to improve the economy and all what he had done was sell the assets and pocket the money.
"he would have burrowed millions of dollars on commercial interest rates just manage the recurrent expenses."
Congratulations for being an incompetent thug and exposing your own hypocrisy.
And you seem to be ignorant on what commercial interest rates.
Abdualla. Commercial interest rate is much higher interest than what normally the Governments burrow loan from other states or NGO.
Usually Government burrow loan at the rate of 2-3% interest rate where as commercial interest rate at this moment in Maldives is aprox. 12 - 13%.
I hope you understand that your proposed solution will only lead to further bankruptcy, Kuribee.
Oh, and Ruder Finn called. Their contract here is over.