Government inherited outstanding debts of US$446 million, says Finance Minister

The former government left a dispersed outstanding debt of US$446.5 million owed to foreign and local banks, Finance Minister Ahmed Inaz informed MPs today during Minister’s Question Time in parliament.

In response to a query by Dhivehi Qaumee Party (DQP) MP Riyaz Rasheed about the amount of loans obtained by the previous and incumbent governments, Inaz revealed that as of April 30 2011, the new administration has taken loans amounting to US$196.4 million.

“Out of that, US$5.1 million has been paid back in accordance with the agreement,” he said. “Therefore, the total dispersed outstanding amount is US$191.2 million.”

Inaz stressed that the loans of both governments were being paid on schedule “without any default.”

Outstanding debts of the previous government included a loan obtained for a fisheries project in 1979, Inaz said.

Asked by MP Abdulla Yameen – leader of minority opposition People’s Alliance – if the figures provided included receipts from sale of treasury bills, Inaz explained that “the total figures I’ve provided do not include treasury bills because the question today was about loans, which is different from securities.”

The total domestic debt in November 2008 – including T-bills issued by the former government – when the new administration took office stood at Rf809 (US$52.4 million), Inaz revealed.

“As of July, 2011, there is now Rf4.9 million (US$317,700) as total debt in T-bills,” he said, adding that parliament approved a budget with Rf1.3 billion (US$84 million) from issuance of T-bills to cover recurrent expenditure.

Inaz noted that the state budget passed by parliament in past years was structurally in deficit, with expenditure outstripping revenue: “To solve this, the tax bills proposed by the government has to be passed and I hope the honourable Majlis will solve this,” he said.

Jumhooree Party (JP) Leader Gasim Ibrahim – who as Finance Minister oversaw the expansionary fiscal policies – meanwhile asked to clarify if the total outstanding debt of the former government included foreign loans to assist victims displaced by the December 2004 Asian tsunami.

According to a UNDP paper on the Maldives’ debt sustainability published in December 2010, “as a percentage of GDP, public debt levels have almost doubled from 55 percent in 2004 to approximately 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,” the paper noted. “The IMF [International Monetary Fund] recently classified the country as ‘at high risk’ of debt distress. From a human development perspective, the extent to which increased debt service obligations may put at risk key social and infrastructure expenditures give serious cause for concern.”

In May, 2011, the IMF warned that the Maldives “continues to suffer from large fiscal and external imbalances.”

The IMF agreed to a “medium-term” policy from the government to reduce its budget deficit “substantially”, “both through additional revenue measures – which would require the support and approval of the Majlis – and through expenditure restraint.“

“The authorities have introduced an initial voluntary separation plan for government employees and are continuing their detailed analysis of the public service, with an eye toward right-sizing government over the medium term,” the IMF noted.

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19 thoughts on “Government inherited outstanding debts of US$446 million, says Finance Minister”

  1. I am not surprised of this figure of $450 million debt left by Gayoom. New York Times reported Gayoom alone took $400 million. Guess Yameen took the rest.

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  2. ...and we call the finance minister above the law! The most important step now is to amend the laws so that the salaries and subsidies are within a reasonable amount that can be payable. DRP, when they had the majority in Majlis purposefully passed laws that require high payments to MBC, fishermen, MPs, CSC etc etc. DRP/PA and the Civil Service Commission are all out to destroy the nation.

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  3. @ Shihab

    "DRP/PA and the Civil Service Commission are all out to destroy the nation."

    This is the typical MDP chant.
    Everyone else is to be blamed.
    This country is being destoryed because our government is a bunch of idiots who know nothing and are acting like puppets controlled by some foreigners.
    Foregin companies, organisations and even governments are taking full advantage of the moment and the government has not even a clue as to what is happenning or the consequences of what they are doing. Their crazy policies are making them dig a hole so deep that no one can escape. Our country is not only destroyed but also sold.

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  4. get your facts right Shihab boy!

    it is the current excuse of a political party MDP and its ineffectual president who are primarily responsible for bringing these so-called ineffective institutions into existence in the name of democracy (but all maldivians - even those who voted for change - today admit that this was just a ploy by the MDP thugs to get into power, nothing else. they are the ones who destroyed the social, economic and political fabric of this nation. they are the ones who pressured the whole nation to vote in these "changes' assuming that maumoon will still continue to be in power, so as to hinder his authority. even MDP people acknowledge this.

    Jameela - how come when you have such "convincing" proof of maumoon and yamin siphoning off millions, yet none of your barking dogs (whether in Government or elsewhere) has been able to show to the public indisputable facts of these crimes?? Wake up silly woman, people don't buy crap just because you say so..!

    MDP and Anni sucks big time, that's the reality and all accusations against "former government" is a convenient excuse to hide their failures!

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  5. One of the most effective ways to corner large scale thieving of funds is to pass a law stating that persons with unusually high wealth must show how they gained those funds and savings in the first place.

    All law abiding and honest people would have no objections to doing this, only the corrupt and illegal money grabbers would be scared as their ill gotten gains would be plain for all to see. The newly rich should be able to substantiate where their riches have come from, if not then further investigation would be needed and their assets frozen until such time as they do.

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  6. Maldives need policy coherence, coordination, synergy, harmony and symphony (not the restaurant). That should be the melody.

    How coordinated is the economic policy across sectors. Talk to a senior government employee and see how much he understand other sectors. Probably not much.

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  7. I guess Inaz is keeping the old balance or refinancing them and all the new loans are only paid from the current revenues.

    Hence, $446.5 million left by old government still equal $446.5 million today (guess the current government has been paying interest)

    And the recent loans by new government on the decline.

    Interesting...

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  8. well inaz. USD446.5 in 30 years. How much debt did MDP government mount in under 3 years? USD300 million plus! so just shut the F##$ up! Gayoom was a F$$%ing dictator. And Anni and your bunch are worse!

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  9. Looks like Inaz need to know a thing or two about public sector debt. Where in the world does a government repay the debt incurred during their rule when a new government comes into power? ha ha.

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  10. @Kasimbe,

    True this government seems to take more debt in shorter span of time.BUT why? coz Gayoom government with [email protected]**ing Yameen and puppet and dr**k Mohamed Jaleel distroyed this economy. Arif Hilmy was one good finance Minister. I hope Inaz will with the current stand he is making, become a real finance minister this country demands. But his challenges are BIG! Hope he is ready and gets the support.

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  11. Inaz sounds so eerily familiar, like some of the people in control of the banks and such institutions in America and elsewhere, Inaz and Co have now come begging for tax money as it seems things are spiralling out of control. They have overleveraged by the sounds of it, run to India like a good boy.

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  12. Unbelievable, the MDP have inherited the DRP mess and yet it is their fault? WAKE UP!

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  13. @Ahmed 10:13

    This is Ahmed 9:10, I agree it was in a bit of a state when the previous government left yet it is a definetely in some state now, a bit of a tip,the current government of MDP is even messier, Anni and MDP are clearly not upto the task, their policies and attitude.

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  14. @Rocket

    "This is the typical MDP chant. Everyone else is to be blamed."

    It's a shame that you don't read what you wrote. You've resorted to the exact same tactic of blaming others.

    The people who shoulder the burden of the mess we have are us, the public at large. It's not MDP, DRP or some other umbrella organisation that will have to find the money to pay external debts, public sector salaries and subsidies.

    I am not surprised that those who are screaming on this forum don't understand such basic principles. The average IQ of the country must be going down the drain. The issues that the country face are long term. They have been created over a long long time too and they need long term solutions.

    You need collective intelligence to solve them and get the country back on its feet. Democracy has given us the right to disagree with each other without fear of persecution. It takes an intelligent mind to make use of that.

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  15. @ Ahmed Bin Addu - I feel what Rocket has said is not completely irrelevant either.

    It actually leads into your argument. It is an undoubted and well-documented fact that the MDP formed out of a group of individuals venting their frustration at the then head of state. Such frustrations were sometimes of an unprofessional and highly personal nature.

    This culture has contributed largely to the predominance of low-IQ discourse and the attitude whereby we rush to relieve ourselves of all responsibility while rigorously apportioning duties to all others.

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  16. @ Suvadheeb

    "You’ve resorted to the exact same tactic of blaming others."

    If I am not to blame the government for making a mess of this country, then who do i blame? It is not DRP or PA or anyone else who is running the country. It is the government who is in-charge of all affairs of this country.

    Of course, the government inherited a debt of US $ 446 million. This fact was not hidden to the government. That there is this huge debt was known even from day one. But, instead of reducing the debt, our collective debt has risen to over 600 million. Why would people who know how to carefully manage finances and run the economy of a country make us end up in such a situation?

    I agree with you when you say: "The people who shoulder the burden of the mess we have are us, the public at large." And aren't we doing it? I mean bearing the burden whether we like it or not?

    Maldivians are in general obedient people. Many may be interested in politics but we prefer calm as compared to chaos and agitation. So we are quiet and simply following our leadership.

    When we voted to change the government, we wanted a leadership that can govern us better and make things better for us. We did not want to increase our debt. We did not vote for change because we thought we want to go from bad to worse. What seems happenning is we are going down the drain.

    Your call for collective intelligence is a red herring. Aren't the government supposed to be this collective intelligence? But don't blame the govenment. Blame us, the people. Please tell me why?

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  17. typo in the last para.
    * Isn't the government supposed to be this collectve intelligence?

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  18. When Arif Hilmy took over the Finance Ministry during Gayoom's time, the debt was larger than when MDP took over.
    He managed to reduce the debt and get the economy on an even keel. There was no dollar shortage or any other currency shortage then.
    MDP mismanaged the economy, that is why were in this trouble.

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  19. @manik

    Trick question. How long was Arif Hilmy in office? How long was Ahmed Inaz in office?
    I honestly dont know the answer. But which ever it is. I think has shown he's capable of standing up to the challenges he is facing so far.
    With a government that came into power just to prove themselves, it wont be easy for someone like him to stand up for what he believes in and what the religion advices against.

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