Bank of Ceylon to provide loans for reclaiming land in Hulhumalé

Bank of Ceylon (BOC) has decided to provide a lon of US$30 million to the Housing Development Corporation (HDC) to reclaim land in the island of Hulhumalé.

HDC Chairman Hassan Ziyath has told local media that the agreement on the matter will be signed within the week.

He revealed that the loan will be paid back within a five year period at an interest rate of 8 percent. The bank is also offering a grace period of two years.

Ziyath stated that physical work to reclaim land in Hulhumalé will commence in early October. The work has been contracted to Belgian company Dredging International.


Government seeking loan for Hulhumalé phase two development

The government is seeking a loan from the Bank of Ceylon for the second phase of the Hulhumalé development project, reports local media.

“We are going through the terms of the loan deal, assessing all conditions and in discussion with them. The State is of the mind to continue this project with own finances,” Managing Director of Housing Development Corporation Suhail Ahmed told Haveeru.

The development had previously been one of five mega-projects pitched to international investors at a landmark forum in Singapore in April. The cost of the project has been estimated at US$60 million.

After having reclaimed 188 hectares of land during the first phase of development between 1997 and 2002, the next stage is set to add another 230 hectares to the northern side of the Maldives’ first fully reclaimed island.

Potential investors in Singapore were made aware of President Abdulla Yameen’s plans to develop the island into a ‘youth city’ with a population of 50,000, which will include a “technopolis park” to facilitate light industries.

The construction of the long-awaited bridge between Malé and Hulhumalé is also planned to further open up economic opportunities in the reclaimed island city.


Bank of Ceylon to arrange US$500 million credit exposure

The Sri Lankan government has agreed to provide a US$500 million credit exposure to the Maldives through the Bank of Ceylon (BoC), according to Maldives Development Alliance (MDA) Leader Ahmed ‘Sun Travel’ Shiyam Mohamed.

Briefing the press Thursday night on President Abdulla Yameen’s maiden state visit to Sri Lanka last week, the MP for Dhaalu Meedhoo revealed that the new administration had requested raising the credit exposure to US$1 billion to alleviate foreign currency exchange difficulties.

“They said they will arrange for US$500 million. So when that is arranged, God willing, it will make it very easy for us to [solve] our foreign exchange issues and that will benefit Maldivian citizens,” Shiyam said.

Along with the Jumhooree Party (JP) led by business tycoon Gasim Ibrahim, the MDA is a coalition partner of the Progressive Party of Maldives-led (PPM) government.

Flanking the president, Gasim told reporters that the Maldivian delegation met ambassadors of Arab nations in Colombo and discussed establishing banking facilities in the country as well as securing loans.

President Yameen added that Vice President Dr Mohamed Jameel Ahmed would leave on an official visit to Arab countries including Qatar, Kuwait, and Saudi Arabia in the near future.

On mutual cooperation, Yameen said discussions on areas such as health, education, and the economy would resume in the existing joint commission this year.

Characterising Sri Lanka as a “second home” for Maldivians, Yameen said official talks with Sri Lankan counterparts mainly focused on issues of concern for the approximately 14,000 Maldivian citizens residing in the neighbouring country.

The issues discussed included education, healthcare, consular services and difficulties obtaining dependency visas, Yameen noted.

Detailed discussions on the visa issue would take place during followup visits by the foreign ministry, he added.

The foreign ministry would also commence joint efforts with the Sri Lankan government to compile a registry of Maldivians living in Sri Lanka, Yameen said.

Following completion of the registry, Yameen added, the Maldivian embassy and its improved consular department would adopt a proactive approach to assisting Maldivians.

Ties strengthened

Moreover, agreements concerning transnational crime, developing police cooperation, vocational training and youth skills development, and sports cooperation were signed during the trip.

An understanding was reached on “avoidance of double taxation” for businesses operating in both countries, Yameen said, such as the corporate profit tax.

A business delegation from the Maldives participated in a business forum with the Sri Lankan chamber of commerce to discuss “the scope for investing in the country,” Yameen said.

Gasim noted that the Maldivian delegation invited Sri Lankan companies to invest in the local tourism industry.

Yameen also revealed that the government has decided to provide a plot of land in Malé for the Sri Lankan embassy.

“God willing, President Rajapaksa will visit the Maldives on our invitation very soon,” he said.

Close bilateral relations between the two countries were strengthened as a result of the trip, Yameen said.

Yameen further noted that the Maldives would back Sri Lanka in the international arena concerning its human rights record and placement in the Commonwealth Ministerial Action Group’s (CMAG) agenda.

“We have raised our voice very positively for Ceylon in these international matters. And they acknowledge it with appreciation,” he said.

Foreign Minister Dunya Maumoon – daughter of former President Maumoon Abdul Gayoom – told reporters that the ministry would provide details of the agreements reached during the president’s visit.

President Yameen also met Maldivians living in Sri Lanka during his visit, discussing the introduction of Quran classes for children and the renovation of the embassy building, said Dunya.

Sea sand

Shiyam also revealed that the Sri Lankan government had given assurances on providing sea sand as a substitute to the river sand aggregate required by the construction industry.

“God willing, we made unexpected progress during the president’s visit,” he said.

Sea sand contains fewer impurities than Indian river sand, Shiyam added, which was mined from mountains and could not provide strength for large buildings.

Difficulties in importing construction material, such as river sand and reinforcement rock boulders from India last year led to a shortage of the supply and subsequent rising costs for construction companies.

On February 15, 2013, the Indian government revoked a special quota afforded to the Maldives for the import of aggregate and river sand.

The Indian government’s decision followed a diplomatic row with Maldives over the previous administration’s termination of a concession agreement with Indian infrastructure giant GMR to upgrade and develop the Ibrahim Nasir International Airport (INIA).


ACC investigating alleged mortgage of public property by MVK

The Anti-Corruption Commission (ACC) is investigating allegations that MVK Maldives Pvt Ltd mortgaged public property for loans from the Bank of Ceylon (B0C) in 2009.

According to local media, the property mortgaged by the company, Maafanuaage, included a 12,000 square foot plot owned by the state.

Following MVK’s default of the loans worth MVR4.5 million and US$195,000, the BoC announced the sale of Maafanuaage last month.


State developments to recommence by 2014 after Nasheed administration’s bills settled: President Waheed

President Dr Mohamed Waheed has claimed the country will be in a position to restart development projects next year as a result of his government repaying millions of US Dollars in bills incurred through the previous administration’s borrowing.

The government announced it would be suspending state-financed development projects in April after exhausting its annual budget for recurrent expenditure (including salaries, allowances and administration costs) in the first quarter of 2013.

The current government has continued throughout the last year to try and establish loan and credit facilities with foreign nations and banks for the stated purpose of “budget support”.

However, speaking during a campaign rally in Noonu Atoll this weekend, President Waheed was quoted by Sun Online as claiming that unpaid bills arising from the government of former President Mohamed Nasheed had now been settled, with no expense expected to be carried over to the 2014 budget as result.

“We have been through a very difficult time over the past two years. We could not do several things, not because we didn’t want to do them. The previous government left the country bankrupt,” he said during the rally.

“The money necessary to buy medicine for our children, the money necessary to repair the school building, the money necessary to repair the harbour of this island – all this money had to be repaid, the unpaid bills for work done by citizens, had to be paid.”

Finance Minister Abdulla Jihad and Minister of Economic Development Ahmed Mohamed were not responding to calls today, while Minivan News was awaiting a response from President Waheed’s Senior Advisor Teresa Wells at time of press.

Former administration’s borrowings

Ahmed Nazim, head of the Parliamentary Financial Committee and MP for the government-aligned Progressive Party of Maldives (PPM), said that former President Nasheed has undertaken “short-term borrowings” during his time in office.

He added that this borrowing included “US$200 million bond” sold to the Indian government with a maturity of one year that was later extended to 24 months.

Nasheed controversially resigned from office on February 7, 2012, following a mutiny by sections of the police and military.

Following the change in government, Nazim said that the Waheed administration had paid US$100 million and “settled the full payment” after Indian authorities requested the country be reimbursed by February 2013.

“Since this was a substantial component of the total foreign debt, [foreign borrowing] has come down because of this,” he said.

Asked whether the committee believed President Waheed had managed to reduce total state borrowing and spending since coming to power, Nazim said he would respond by tomorrow ( August 18 ) after having time to study relevant statistics.

In 2012, President Waheed reportedly said he would not resort to borrowing from foreign governments in order to finance government activities.

However, the government has since sought a number of foreign loans to supplement the state budget.

Earlier this month, the state requested parliament approve a US$29.4 million loan from the Bank of Ceylon to finance the 2013 budget approved by parliament.

In July, the President’s Office confirmed discussions had been held with Saudi Arabia, seeking a long-term, low interest credit facility of US$300 million to help overcome “fiscal problems” facing the nation.

Supplementary finance plans

Finance Minister Jihad claimed back in December 2012 that the MVR 15.3 billion (US$992 million) state budget approved by parliament might not last until the end of 2013 – requiring supplementary finance for the state.

In April 2013, Jihad sought authorisation from parliament to divert MVR 650 million (US$42 million) allocated for infrastructure projects in the budget to cover recurrent expenditures.

Jihad warned that government offices and independent institutions might be unable to pay salaries or electricity and phone bills if funds were not transferred from the MVR 1.8 billion (US$117 million) Public Sector Investment Programme (PSIP).

“Reckless financial management”: MDP

In July, Maldivian Democratic Party (MDP) MP and Spokesperson Hamid Abdul Ghafoor said that the heavily partisan parliament now effectively controlled state finances as a result of former opposition politicians – now part of President Waheed’s government – imposing tighter spending restrictions on former President Mohamed Nasheed’s administration.

The opposition party also accused the current government of reckless financial management, pointing to a potential US$1.4 billion compensation bill facing the state after it decided last year to abruptly terminate a US$511 million airport development contract agreed with infrastructure group GMR.


Addu City gets Bank of Ceylon branch

The Bank of Ceylon (BOC) has said it will open a branch in Addu City in time for the South Asian Association for Regional Cooperation (SAARC) Summit, which is scheduled for that site in November.

The bank’s chairman said construction will start as soon as the Maldives Monetary Authority (MMA) has approved the proposal, reports Haveeru.

BOC has also provided a US$10 million revolving credit line to the Maldives with a six percent interest rate.

Sri Lankan media is reporting that the credit line will be used to purchase fruit and vegetables from Sri Lanka.