The cabinet discussed reducing the level of public debt at its weekly meeting yesterday, exchanging views on debt repayment.
On August 10, Finance Minister Ahmed Inaz told parliament that the current administration inherited a dispersed outstanding debt of US$446.5 million owed to local and foreign banks. The new government obtained loans amounting to US$196.4 million as of April 30, 2011, of which US$5.1 million had been paid back.
The government meanwhile proposed a fiscal responsibility bill to parliament last month to impose limits on government spending and debt accumulation as part of its 18-bill economic reform package.
A UNDP paper on achieving debt sustainability in the Maldives published in December 2010 observed that “as a percentage of GDP, public debt levels have almost doubled from 55 percent in 2004 to an estimated 97 percent in 2010.”
“Public debt service as a percent of government revenues will more than double between 2006 and 2010 from under 15 percent to over 30 percent,” it continued. “The IMF recently classified the country as ‘at high risk’ of debt distress.”