Former President Mohamed Nasheed has warned of a sovereign debt crisis if the Maldives is forced to pay US$1.4 billion in compensation to GMR over the abrupt termination of a concession agreement to develop Ibrahim Nasir International Airport (INIA).
Nasheed also reiterated calls for the government to reverse the decision to cancel the contract in December 2012.
“The Maldives is now known around the world as a country that doesn’t keep its promises or honour the contracts. The airport fiasco will hit each and every Maldivian because banks won’t lend money and companies won’t invest in our country without demanding much higher rates of interest,” Nasheed was quoted as saying in a press release issued yesterday.
“By now, Maldivians should have been looking forward to a world-class, new airport, to rival Kuala Lumpur, Singapore, and Hong Kong. Instead we have nothing but an abandoned building site. The actions of President [Abdulla] Yameen and [Dr Mohamed] Waheed have caused this crisis and Maldivians will be paying for their recklessness for decades to come” he added.
The press statement insisted that international best practices were followed in the bidding process – which was overseen by the World Bank’s International Finance Corporation (IFC) – while the Anti-Corruption Commission (ACC) has since ruled out corruption in the airport deal.
Nasheed’s remarks comes on the heels of the opposition Maldivian Democratic Party (MDP) – of which he was recently appointed acting president – threatening to terminate any new agreements concerning the airport should the party regain power.
Failure to reinstate the airport development contract would cause the Maldives to “suffer unforeseeable risk and irrevocable harm,” the party said in a statement yesterday.
Compensation owed “in any case”
Following President Abdulla Yameen publicly conceding that the Indian infrastructure company was owed compensation, GMR said it intends to stick to the US$1.4 billion compensation claim.
“The forceful takeover of the airport by Maldives government amounts to repudiation of a valid contract and therefore damages, including loss of future profit has to paid,” the company said in a statement on Friday (April 26).
Asked by reporters a day earlier if he was confident the outcome of the arbitration would be favourable for the Maldives, President Yameen said: “The reality we have to accept is that a government with full sovereign powers made an agreement with a foreign party and leased [the airport]. This is a government, and what preceded this was a government as well. So believe we have to pay them some kind of financial compensation.”
If the judges on the arbitration panel accept the government’s arguments for nationalisation or expropriation, Yameen said the compensation owed to GMR could be smaller.
“We’re going to have to provide compensation in any case,” he conceded.
Yameen however contended later that GMR was owed US$300 million as compensation for its investment as well as upgrades to the airport.
Yameen had previously said that the out-of-court settlement sought by GMR was too high, and that he would await the outcome of the arbitration proceedings, which could take up to another two months.
The US$1.4 billion sought by GMR at the Singapore Court of Appeal for “wrongful termination” of the 25-year contract exceeds the annual state budget whilst the national debt is expected to rise to MVR31 billion (US$2 billion) this year.
Nasheed meanwhile warned that “the consequences of the outcome of the arbitration will drive the Maldivian economy to the brink, leading to major sovereign debt crisis.”
The statement noted that estimated GDP for 2014 was US$2.5 billion with an external debt of US$868 billion while the Maldives presently “receives less than US$30 million in grant aid.”
“Coupled by the budget deficit and domestic debt crisis, we are looking at a heavy burden on our children and grandchildren. It would mean by the end of 2014, debt will increase from 25 percent of GDP to 88 percent of GDP,” it added.
19 thoughts on “Nasheed warns of “imminent sovereign debt crisis””
The evidence of corruption in GMR deal is overwhelming. Truth of the matter is that MDP put all its eggs and hopes in the GMR basket
MDP is better off defending Maldives citizens rights and cleaning up the judiciary rather than some Indian company
I don't support gmr, but the maldivians authorities have no smoking gun evidence of corruption in this deal,bribes paid to whom, where, which bank account, how much money????,simple accusations don't count for anything
And here I thought Nasheed would change tactics, but he seems to be playing that darn old trumpet.
Bribes paid to Nasheed and his associates under the table.
Explain how Nasheed got so much money to spent for 3 years campaign ? He has spent millions of dollars on his campaign.
GMR is the people who had given half those money .
Equatorial Center , was another corrupt and daylight robbery .
Nasheed had spent over 800 million to build that building ? Unless paper money was used to clean the people's ass, i am sure that much of money would not had gone into that project.
President office, budget is another proof of taking money.
each audit report that has come out during Nasheed time, involves huge corruption over 5 billions have been spent outside constitutional rights entrusted to the idiot .
Nasheed is the man who had drag this country into this mess and he had managed to increase the country debt from 350 million to a billion dollars in just 3 years in power.
Nasheed is not the man who should open the mouth about the country's debt .
Well Nasheed this wouldn't have happened if you had placed a mutually beneficial agreement in the first place. Plus anyone who has been to India will know that country is not the best place to trust on infrastructure. Look at their roads for example.
@who is more naive: Instead of claiming so, why don't you show some proof, instead of being a mouthpiece of DhiTV?
For a bunch of pathological crooks to call an Indian company 'corrupt' is really really rich.....like the pot calling the kettle black.
I hope the GMR settlement bankrupts you and you end up selling your mothers to the arabs.
Let me just remind you pompous self opinionated morons that the New Delhi suburb of Noida alone has a population and economy many times greater than yours.
I think Yameen had tried all his economic theories and failed. Now he has to pay through the nose.
Er... Hello...We know this..
No need to warn us.
You think that Maldives exist just because of you. You can forget Maldives and getting back out airport.
GMR will also get kicked out from cebu also and GMR is one of the biggest corrupted company in the world.
In India 50% parliment menbers have CRIMINAL RECORDS of them 30 % are SERIOUS including MURDER..
Would you care to prove how that a mega investment from such a country would be corruption free..
tip -a major political pary in a neighbouring small island country wants to defend a mega Indian project, even at the cost of soverignity.
How else would you explain it other than in the context of CORRUPTION...
Who is reason behind all this. Zaki is like 100 times richer than he was when M's 30 years ended. MDP governments corruption lead to this.
When unscrupulous elements like hero, who treat agreements like toilet paper have to pay compensation through their blood, for fooling around with agreements will they learn what honour is,gmr has build 4 international airports in 2 continents unlike hero's vomit of xenophobic Islamic radicalism
This coming from the guy that lied to all small island nations at COP15?
I don't think your new airport will ever be built. Once GMR have been compensated you will not be able to afford to refurbish the toilets never mind build a new runway. I can't see any other company rushing to complete the work in your politically unstable country.....your track record isn't exactly great with contracts terminated willy nilly whenever an election is due. Perhaps you should approach the Bin Laden Co of SA to finish the airport.....they would be perfect for the job.....the name says it all.
Yes I do believe your very survival depends on aid and handouts from India, paid for by infidel tax payers like myself.....our economy is now the fourth largest in the world.
The next government in India is likely to be the Hindu nationalist BJP which will have no interest in you 'true believers' nor will it tolerate the mistreatment of its citizens.
One of the first things the new government should do is cut off all aid, stop exports and sever air links.
You cannot survive without aid and handouts from India.....instead of taking heroin and hash oil, I suggest you junkies switch to Valium.....it will help to calm your nerves in the coming months.
It seems you are very disheartened when we Maldivians refer GMR as very corrupt. Refer to the link below;
you can see how endemic corruption is in India
If India is so corrupt,
Don't sign us up for building contracts
Don't buy our foodstuffs
Don't buy our building materials
Don't buy our medicines
Don't buy our clothing and goods
Don't buy our music or films
Don't watch our TV programmes
Don't clog up our universities and hospitals
So you see morons.....
You cannot survive without us kuffars and with our booming economy we don't need you at all.
I guess it is very difficult sometimes to show some gratitude to your betters.
Miss India ..india on the map looks like your ''V''....u know and smells like rotton shit.dirty unclean place
@ baja,adam,hero get some education ,rather than blurting out nonsense about corruption, in gmr deal.The onus of providing the evidence of corruption in the deal on you low iq types,the said deal
was vetted by ifc,aus aid,netherlands development bank,none of them complained of corruption,as regards pedigree of gmr google it eg http://ifclmedia.com/feeds/, http://www.livemint.com/Politics/Z9V8sCZai2MYqqE0pGBORJ/Maldives-issues-notice-to-GMR-for-terminating-airport-contra.html
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