In a move aimed at shoring up its budget, the government of Maldives has recently obtained a substantial loan of 50 million euros (equivalent to MVR 842.8 million) from a foreign private entity. This development comes to light as per the most recent data on foreign borrowings released by the finance ministry, which highlights the acquisition of the euro-denominated loan on June 18th.
While the government’s decision to seek financial assistance to support its budgetary needs is not uncommon, certain crucial details surrounding the transaction remain undisclosed. Notably absent from the official announcement are particulars such as interest rates and repayment terms. When queried for additional insights, a finance ministry official opted to withhold further information and instead recommended filing a Right to Information (RTI) request for interested parties seeking clarification.
In conjunction with the 50 million euros loan, the government has also entered into two separate borrowing agreements with foreign entities earlier this year. These loans, both secured from the World Bank on the same date of June 18th, encompass diverse initiatives to enhance various sectors within the nation.
The first installment, amounting to $19.7 million (approximately MVR 303.8 million), has been designated for a comprehensive project aimed at bolstering the Maldives’ fisheries industry. The funds will be channeled towards initiatives that facilitate the growth and advancement of this critical sector.
Simultaneously, a second loan of $5.6 million (equivalent to Rs 86.4 crore) has been allocated to drive improvements in business competitiveness and the governance of State-Owned Enterprises (SOEs). This project seeks to enhance the operational efficiency and overall efficacy of SOEs, ultimately contributing to a more robust economic landscape.
As the Maldivian government navigates the complex financial terrain to address its 2023 budget deficit, which has been estimated at MVR 11.5 billion, a multi-pronged approach to financing has been outlined. This includes:
- Foreign loans amounting to MVR 4.1 billion
- Utilization of Green/Blue bonds, totaling MVR 771 million
- Budget support sourced from bilateral creditors, with a sum of MVR 1.5 billion earmarked
- Domestic loans and bonds, with a projected value of MVR 4.7 billion
These diverse avenues of financing underscore the government’s commitment to ensuring the stability and sustainability of the national economy, despite the various challenges it faces in the current fiscal landscape.