The Maldivian government has settled the debt and completed payments for a USD 50 million treasury bond sold to the State Bank of India (SBI) through the Indian government in January 2020.
The bond was sold to SBI by the previous government to alleviate a dollar shortage. It was to be repaid in November but the SBI extended payment to last Monday upon request by the outgoing administration.
Finance Minister Dr. Mohamed Shafeeq told Adhadhu that the government decided to settle the payment by the deadline. The government and the Finance Ministry decided to repay all such debts and to take further loans in accordance with the new borrowing plan made public by the government.
Shafeeq’s comments came in response to rumors about India refusing to extend the payment period. The current administration has no intention of “pleading” to roll over debt, he said.
The deadline for the debt repayment fell after a row escalated over the mockery of Indian Prime Minister Narendra Modi.
The government decided to repay the debt amid a severe foreign currency shortage. The state’s foreign currency reserve stood at USD 140 million at the end of last year, according to the latest financial statement from the Maldives Monetary Authority (MMA).
Despite the difficulties, Finance Minister Shafeeq assured that the country would not face any hardship if money was borrowed in accordance with the government’s plan.
Funds needed to plug the deficit could be secured from international and domestic financial markets, he said. The government would seek the lowest borrowing costs, he added.
Of the MVR 16.3 billion needed to manage expenditure, the government has sought proposals from investors who could provide dollars equivalent to MVR 8.4 billion. An announcement was made last week to sell a further MVR 4.3 billion worth of T-bills.
In addition, an MVR 50 million treasury bond was sold to private businesses through the Maldives Stock Exchange.
