The Managing Director of the State Trading Organisation (STO) has assured that the country’s looming oil payment crisis will be resolved tomorrow after the central banking authority committed to financing overdue payments.
“MMA [Maldives Monetary Authority] has given certain commitments – we still need to arrange everything – tomorrow we are going to work on it,” Shahid Ali told Minivan News today.
Shahid told MPs last week that the STO would run out of oil as early as November 10 if it did not pay some of its US$20million oil debt.
“The exact amounts have not been agreed upon,” Shahid explained today (October 3). “Tomorrow we need to make at least some payments.”
During an emergency meeting of the Majlis Finance Committee last week – with both MMA Governor Dr Fazeel Najeeb and Finance Minister Abdulla Jihad in attendance – Shahid told MPs that government-owned companies owed the STO more than MVR600 million.
Jihad informed the committee that he had asked the MMA to provide MVR50 million to the STO but was told that the central bank could only arrange for MVR20 million as the public bank account was overdrawn.
The MMA governor said the state did not have the financial resources to provide the requested amount, adding that the central bank would be forced to print money to meet the government’s requirements.
In the event that the country runs out of oil on November 10, Jihad then said he would resign from his post.
“I am asking the MMA for cooperation to provide the funds. This is a basic necessity. Otherwise there is a fear that we could completely run out of oil. Funds have to be arranged for citizens’ basic needs even if the public bank account is overdrawn,” he said.
Minivan News was unable to reach Dr Najeeb at the time of press.
When asked if the MMA was printing money in order to finance the oil payments, Shahid simply repeated that the authority had “given certain commitments”.
The MMA’s quarterly figures show that the Maldives’ petroleum imports amounted to US$248.4 million in the first half of 2013 – representing 29 percent of the cost of all goods brought into the country.
Najeeb also told the Majlis Public Accounts Committee last week that state reserves were insufficient to balance the country’s growing deficit.
Local media reported Najeeb as warning that the state was on the verge of being forced to print money.
“Parliament must also consider ways to reduce the structure of the State. I think this is very serious. Or else, the value of our money will keep dropping,” the Governor was quoted as saying.
The MMA’s most recent Quarterly Economic Bulletin revealed that government finances had “further deteriorated in the first six months of 2013” due to a sizeable shortfall in expected revenue coupled with a marked increase in recurrent expenditure.
After measures to raise 15 percent of total revenue budgeted for 2013 – MVR1.8 billion (US$116.7 million ) – failed to materialise, Finance Minister Abdulla Jihad was forced to seek parliamentary approval to divert MVR 650 million (US$42 million) allocated for infrastructure projects in the budget to cover recurrent expenditure.
In recent months, the government has become increasingly reliant on the issuance of short term treasury bills in order to plug gaps in the current budget.
Whilst introducing a proposed MVR16.4 billion (US$1 billion) budget for next year to the Majlis last week, the Finance Minister urged the government to pursue austerity measures.
In November 2012, a team from the International Monetary Fund (IMF) advised that strengthening government finances was “the most pressing macroeconomic priority for Maldives”.
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Not only illegal but incompetent. Sums up the coup government. Just let us vote. Then go.
We are a 100% Muslim country. Why SAUDI ARABIA can't give oil free of charge for our small country, at least they can give some good concessional price this is not fair to stop supply. I think we can approach our OIC or Iran , Iraq or Kuwait for fuel
No oil means no fuel for airlines landing at Male. This is not a problem for arrivals from Singapore and UAE and other medium distance arrivals as they can tanker. But direct flights from Europe will suffer. Tech stops are expensive and not popular.
The other problem is fuel for transport to the Atolls and for the resorts themselves. All in all this spells disaster for Maldivians. The tourists will go elsewhere.
Once holiday destinations begin to have problems they never recover. It can take 10-20 years. Tunisia, Egypt and Madagascar are just feeling the results of their recent unrest. Tourism is all but dead.
This loss of income is in addition to the massive upheaval the average Maldivian will suffer without energy.
The Maldives will be reduced to lower than 3rd World status and lower than even Ethiopia.
The amazing thing here is that unlike in the countries just mentioned, there is no general uprising, widespread violence or disruption to tourism in the Maldives.
The financial problems stem from sheer poor government and poor leadership. If this is not bad enough, this leadership allows elements connected to to bite the hand that feeds it, India in particular. It wastes money with an over bloated administration, police force and military. It allows the Judiciary to waste millions of dollars on annulled elections. It has no comprehensive taxation system thus allowing millions to be uncollected.
No wonder the World in general is considering the Maldives Government as total retards. Either that or they are taking one hell of a gamble. The gamble being to risk all or nothing to destroy the MDP. To many it seems that Gayoom would rather see the Msldives destroyed that lose to Nasheed. Scorched Earth policy comes to mind.
Whether Maldivians find it distasteful or hard to stomach does not change the facts.
The Maldives is incapable of self rule. Its time to go back into a protectorate before its too late.
The biggest problem is getting someone to take the job. The only possible taker may be China. In which case, may Allah protect you!
You have all got to rise up and get rid of the SC and Gayoom.
Time is running out, you may have less than 14 days!
What did they give us during Tsunami? After USA and EU granted assistance they out of shame gave us a meager amount just to pull wool over our eyes. Terrible lot.
This is why Yamin promised to explore for oil in our seabed. So we don't have to take the begging bowl to Soudi Arabia or OPEC. Our glorified puppet president did ask for assistance from Soudi Arabia but got nothing. Once Yamin is elected our leader MAG will meet the king and fill our tanks for at least 6 months until our great economist pull this nation out of the great economic disaster which we find ourselves in now. This puppet is really destroying this economy and it is sooner the better we elect Yamin
@ Maldivan
How naive of you to believe Saudi Arabia would help another Muslim country with free oil.
Saudi have for decades ripped Muslims hard earned cash straight from their pockets, either from the inflated prices of visiting Meeca or the fixing of the global oil prices.
The one true fact about Saudi is their greed for money. In fact it seems to be the common trait amongst the majority of Muslim countries,hence the wide gap between the poor and the rich in these countries.
It is in times of need that you know your real friends.
The USD will increase even more on the black market if notes are printed and you bet the economy will continue to deteriorate.
Feeling very sad that some people are destroying our country on purpose for the sake of power!
I see the MMA's Governor Najeeb has announced the oil money will have to be printed. The Maldives will only be able to that once or twice at the most. Then nobody will sell them anything.
It will be interesting to watch Gayoom and his cronies squirm as the IMF withold any aid unless full and free elections take place and other international me,bers insist on MDP being left unmolested.
There is only one cure for all this mess. Nasheed as President or economic ruin. Which will Gayoom choose?
Saudi Arabia produces and sells oil. China needs more and more oil to meet its expanding economy. The US needs more oil, but is becoming capable of producing most of what it needs. The US is a shrinking market for Saudi oil; China is a growing market.