Former President Abdulla Yameen has said the government plans to take out a USD 350 million loan at an interest rate of 17 percent to refinance sukuk.
Credible sources have confirmed that the government is looking to borrow USD 300 million from Cargill Financial Services International (CFSIT) to repay the USD 500 million (MVR 7.7 billion) sukuk due by April 8.
But the government has not commented.
At the People's National Front (PNF) gathering on Thursday night, Yameen did not mention the financier, but was likely referring to Cargill.
Yameen said the 17 percent is not the general lending rule and is the behaviour of "loan sharks."
"They don't want to lend even at 17 percent. That's the level of credit rating here now. Who would take a loan at 17 percent for short-term or long-term purposes in a country?"
Moody's and Fitch, the world's two largest rating agencies, previously downgraded the Maldives to non-investment grade.
As long as this rating remains, it will be difficult to get a loan at a good rate and sell a sukuk at a low yield, financial experts said.
Yameen pointed out that lenders charge high interest rates of 17 percent because they know that the Maldives is forced to raise money at any cost. This reflects the fragile state of the country’s finances today, he added.
Although official figures put the total debt at MVR 160 billion, the real figure is much higher, he said, adding that the country is sinking further into a debt pit by rolling over existing loans instead of repaying them.
