Minister of Finance and Treasury Abdulla Jihad has told local media that the country may struggle to cover state wages and bills unless US$25 million in proposed financing from India is secured by next month.
Jihad reportedly told Parliament’s Finance Committee that balancing the national budget for the next two months would be “extremely difficult” without the US$25 million to support a US$17 Asian Development Bank (ADB) loan taken as budget support for the current month, according to the Sun Online news agency.
The Indian government had announced that it would be granting the Maldives an additional US$25 million as part of the US$100 million standby credit facility agreed last year under the previous government.
Jihad also told the committee that state reliance on Treasury Bills (T-bills) presently amounted to MVR5.3 billion, an additional deficit he said would need to be covered unless the short-term financing mechanism can be prolonged.
T-bills are sold by governments all over the world, serving as a short-term debt obligation backed by sovereign states. In the Maldives, T-bills are said by financial experts to have a maximum maturity of six months, in which time they must be repaid.
Sun quoted Jihad as saying that MVR300 million in T-bills had been received by the Madlvies Monetary Authority (MMA), though these were presently being held by the Finance Ministry owing to a “lack of sufficient cash flow”.
Jihad told Minivan News last week that the Maldives would need to brace for long-term austerity measures in order to address the country’s fiscal deficit – with further budget cuts anticipated in all government departments over the next 12 months.