Tag: debt

Treasury Bills debt stands at over a third of annual budget: report

Government debt accrued through the sale of Treasury Bills to banks and commercial enterprises in the country is estimated to be equivalent to more than a third of this year’s Rf12bn national budget, according to Maldives Monetary Authority (MMA) figures.

Haveeru has reported that at present, Rf5bn of debt has been generated through the MMA’s sale of T-Bills, which are sold frequently to national businesses at interest rates recently set around 4.57 percent, 5.34 percent and 5.53 percent.

According to the report, Treasury Bills have been sold by the government since September 2006 initially as a short-term attempt to settle outstanding national debt.  An estimated Rf1.3bn is expected to be raised through the sale of T-Bills under the current national budget.

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Third of operating income “bad and doubtful debts”: BML quarterly report

The Bank of Maldives (BML) has reported a stable third quarter profit of Rf 10,412,552 (US$810,000) for the three months to September 2010, a small increase on second quarter profit stemming from a nine percent increase in overall income.

However of the state-owned bank’s third quarter operating income of Rf 140,236,774, almost a third (Rf 55,242,937, or US$4.3 million) was downgraded as provision for “bad and doubtful debts”, a Rf 8 million (US$620,000) increase on bad debts for the second quarter 2010.

Staff costs represented Rf 43,822,269 (US$3.4 million), over half the of the bank’s total operating expenses of Rf 71,110,433 ($US5.5 million).

During the quarter the bank sanctioned 2039 loans, worth Rf 708 million (US$55 million).

The bank also announced a new pension plan and staff provident fund, taking effect in 2011, and selected candidates for its “executive grooming programme”.

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State debt reaches Rf1.6 billion, reports MMA

State debt reached Rf1.6 billion, (US$124.5 million) in July 2010, according a letter sent to parliament by the Maldives Monetary Authority (MMA).

Haveeru reported that the state spent Rf4.3 billion (US$334 million) while Rf3.5 (US$272 million) was received to the budget.

According to the letter, the MMA warned that high recurrent expenditure against revenue “would increase domestic demand in Maldives economy, affect the exchange rate and exacerbate the dollar shortage.”

According to Haveeru, the MMA highlighted the importance of passing the bill on income tax this year. It also recommended that foreign currency revenue be retained in the local banking system.

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Inland Revenue to recover unpaid debts

The newly instituted Maldives Inland Revenue Authority (MIRA) has undertaken efforts to recover debts and monies owed to the government by various parties.

Commissioner General of Taxation Yazeed Mohamed told newspaper Haveeru that the debts include fees, royalties and rent from 45 different sectors.

While MIRA was working with relevant government authorities to recover the debts, Yazeed said “necessary measures” would be taken from 2011 onward if dialogue and other procedures fail.

The Commissioner General did not reveal the amount being sought by the government.

However, an audit report of the former Department of Inland Revenue released in October 2009 revealed that it had failed to collect over Rf1.1 billion (US$85.6 million) in unpaid taxes, fines and resort rent.

“As a result of the department’s inadequate efforts to collect unpaid taxes, as of 31 July 2009, the government has not received Rf117 million (US$9.1 million) in unpaid taxes and fines and none of these monies has been received as of 30 September 2009,” it reads.

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13 Day Invoice Deadline for DRP over alleged Rf500,000 debt to Island Aviation: Civil Court

The DRP has been given 13 days by the Civil Court to complete an examination of documentation and invoices from Island Aviation Services, which is claiming that debts of Rf500,000 are owed to the Maldives government airline by the opposition political party, reports Miadhu Daily.

The Court said this would be DRP’s last opportunity to respond to Court orders, according to Miadhu Daily, and the DRP would have to respond to Island Aviation Services regarding the case by IAS against the DRP for unpaid bills.

In the previous hearing held on the case, the DRP’s lawyer appealed for more time to examine the documentation and invoices presented by the national airline, reported Miadhu Daily, and the DRP also hinted that it desired to settle the case out of court, after the IAS went to court following lack of cooperation from DRP.

The DRP later said it needed more time and requested an extension.

During the latest hearing, the IAS lawyer said that the airline no longer wished to reach an “out of court settlement” with the DRP, according to Miadhu Daily, and the DRP had also failed to respond to IAS’s earlier calls for an out of the court settlement, the IAS lawyer added.

The IAS has said that DRP is trying to delay payment as long as it can, and the DRP’s lawyer did not dispute the fact that there was a pending payment, but he said some of the IAS invoices were repeated and disputed the exact figures claimed by the IAS, reported Miadhu Daily.

The DRP lawyer asked for 29 days to verify the IAS documentation, but was given 13 days.

The judge also declared at yesterday’s hearing that the DRP has failed, or does not wish, to settle the issue out of court as earlier proposed by the IAS.

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MPs with ‘decreed’ debt face disqualification from parliament

An article of the constitution stating that members of parliament with unpaid debts face immediate disqualification from the Majlis stands to be tested in the Supreme Court, after a spate of cross-party accusations on the subject.

Article 73 [c]of the constitution states, “A person shall be disqualified from election as, a member of the People’s Majlis, or a a member of the People’s Majlis immediately becomes disqualified, if he has a decreed debt which is not being paid as provided in the judgment.”

Deputy Leader of the Dhivehi Rayyithunge Party (DRP) Umar Naseer has filed a case at the Supreme Court claiming that the Maldivian Democratic Party (MDP) MP for Thimarafushi Mohamed Mustafa has an unpaid debt dating back to 1997 and should therefore be unseated.

However the MP has said there was “no doubt” of his eligibility for remaining an MP, dismissing the case filed against him. The Supreme Court has concluded its hearings on the case but has yet to deliver a verdict.

Umar argued that MP Mustafa should not have been eligible to be a candidate in last year’s parliamentary elections ”because he had a proven debt which was not paid.”’

“He has to pay US$31,231.66 (Rf401,326.83) to Bank of Credit and Commerce International (BCCI), which is now bankrupted and its loans and debts have been taken over by the Maldives Monitary Authority (MMA),” Umar said.

Umar said that on 28 August 1997, the civil court ruled that the debt should be payed by MP Mustafa and his company Seafood International Private Limited.

”We raised the issue at the Elections Commission (EC) during the parliamentary elections and the former president of EC said that there was no debt which should be paid by Mustafa,” he said.”That’s why I took it to the Supreme Court.”

But, Mustafa claimed he inquired with the MMA about the outstanding debts.

‘The MMA said that there was no debt that I should pay,” Mustafa said, ”That’s why I ran in the parliamentary elections.”

Mustafa added that the Elections Commission (EC) also investigated the case and ruled that he was eligible.

‘They are trying to defame my character,” he said. ”Umar Naseer is a politically insane person.”

Last month, the Male’ municipality asked the attorney general to file a suit against Mustafa to recover unpaid rent for a plot he leased for a restaurant in artificial beach.

MP Mustafa is one of several MPs who have been variously accused of having outstanding unpaid debts.

Namira Engineering was sentenced last week to pay Rf116,497 to the State Trading Organisation (STO). People’s Alliance MP and Deputy Speaker of Parliament Ahmed Nazim, who was former managing director of Namira Engineering before he resigned from the company, said he had left it three years ago and has no connection with the debt.

On 8 January, a criminal case involving Nazim, Eydhafushi MP Ahmed “Redwave” Saleem and former Atolls Minister Abdullah Hameed, was sent to Prosecutor General’s Office.

On 31st of January, Peoples Alliance party leader Yameen Abdul Gayoom sued the DRP leader-elect Ahmed Thasmeen Ali to recover an unpaid debt.

On 8 December 2009, Sultans of the Sea, a company affiliated with DRP Leader Ahmed Thasmeen Ali, was ordered to pay Rf654 million to Bank of Maldives.

The BML audit report released last year revealed that US$633 million worth of loans was issued on 2008. Of the US$633 million, US$45 million was granted to Sultans of the Seas and US$36 million to Fonnadhoo Tuna Products.

MP Thasmeen did not respond to Minivan News at time of press.

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World Bank reports Maldives’ debt caused by former government

The World Bank has issued a report saying the Maldives was on the verge of economic collapse in 2008 when President Mohamed Nasheed’s government was elected, reports Miadhu.

According to the report, before the 2009 presidential elections, the Maldives was headed towards an economic crisis similar to that of Zimbabwe. The World Bank said the economic difficulties the country was facing was due to the previous government’s reckless fiscal discipline.

In late 2008 the country’s Gross Domestic Product (GDP) fell by almost 5 percent, while the government’s expenditure rose to almost 30 percent of the country’s income.

Adding to the previous administration’s increase in spending in their last two years in government, 50 percent of the state’s wage bill was going to civil servant salaries.

When the new government took over, the country’s debt stood at 110 percent of GDP according to Minister of Foreign Affairs Dr Ahmed Shaheed.

The International Monetary Fund (IMF) and the World Bank have made recommendations to President Nasheed’s administration on how to reduce the debt in a responsible manner, and the government has been implementing these recommendations.

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