Government acquires USD 54.9M loan for budget support

The government has secured a loan of USD 54.9 million (MVR 844 million) from an foreign private investor for budget support.

While statistics provided by the ministry of finance confirm the procurement of the loan from a foreign investor, specific details regarding the investor's credentials have not been disclosed. The ministry was unavailable for comment on the loan, which was acquired on July 18.

The government had also secured a loan of USD 34 million (MVR 520 million) from the International Development Association (IDA) in June. The state's foreign debt for the current fiscal year has now reached USD 117 million.

The government announced a state budget of USD 2.8 billion for the year 2023, accompanied by an annual budget deficit of USD 933 million. To address this deficit before the conclusion of the fiscal year, the state is required to generate revenue either through the issuance of treasury bills or by securing loans.

The government also set out an annual allocation of USD 155.6 million receivable in foreign grants, of which only 8 percent, equivalent to USD 13.9 million, has been received so far. The remaining 91 percent of the budgeted total is still pending acquisition by the government.

As the government maintains a consistent acquisition of funds for its state budget via the sale of treasury bills and loans, the Maldives Monetary Authority (MMA) continues to print money. During the month of July, the central bank generated MVR 1.1 billion (approximately USD 71 million) through this process.

The government has paid USD 90.8 million to settle it debts so far in 2023, and is required to pay USD 136.2 million for outstanding debts this year.

While the government has obtained a total of three loans in 2023, a cumulative sum of USD 402.1 million through a total of eight loans has been secured from 2022 up to 2023 so far.

Statistics from the ministry of finance indicate that the government's overall debt is projected to escalate by USD 2.98 billion from 2019 until the end of 2023.

The current state debt stands at USD 7 billion, out of which USD 3.2 billion is foreign debt and the remaining USD 3.8 billion is domestic debt, which accounts for 113 percent of the Maldives' Gross Domestic Product (GDP).