Additional reporting by Luke Powell
The Maldives government has to pay US$50 million to State Bank of India (SBI) next month, Finance Minister Abdulla Jihad has stated.
In December 2012 the Maldives government paid US$50 million to SBI, who refused to extend the period of the treasury bonds issued by the bank during the previous government, local media reported.
Speaking to local newspaper Haveeru, Jihad said the government is yet to come to an arrangement to pay the next US$50 million installment to SBI, explaining that the money will have to come from the Maldives Monetary Authority (MMA).
“The US$50 million due in February will have to be paid from the reserve. We have been ordered to pay the amount. There has been no change to the order so far. So it must be paid,” Jihad was quoted as saying in local media.
Following increased tensions between the Indian government and Maldives government over the airport dispute with Indian infrastructure giant GMR – which was evicted from the country by the present government in December 2012 – India turned down a request to extend the treasury bond period.
Payment of the debt will see the state’s reserves fall below US$140 million – less than a month of imports.
On top of the debts due to SBI, GMR is currently seeking compensation for the contract termination in the Singapore Court of Arbitration, which it has calculated at US$800 million.
The company’s lenders, including Axis Bank, have meanwhile called in their loans, for which the Maldives’ Finance Ministry is the guarantor.
Attorney General Azima Shukoor recently claimed that although the previous Attorney General may have signed the guarantor document, the government would argue that is could not act as a guarantor under the Public Finance Act without parliament’s approval, which was allegedly not obtained.
“The State is acting as the guarantor to the loans taken based on the transactions between GMR and Axis Bank. I believe that is not something permitted under the Finance Act. It is like a blanket sovereign guarantee,” Shukoor told local media in December.