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State debt expected to rise MVR 67 billion by 2021

Lamya Abdulla
25 August 2021, MVT 12:35
(FILE) Photo of Finance Minister Ibrahim Ameer in an interview he provided to Mihaaru: the Fiscal Report released on Tuesday stated the COVID-19 pandemic contributed to increasing the state debt -- Photo: Ahmed Awshan Ilyas/ Mihaaru
Lamya Abdulla
25 August 2021, MVT 12:35

Finance Ministry of Maldives has predicted state debt to be at MVR 79 billion by the year ends.

This is a 12 billion increase compared to 2020, the state debt had been MVR 67 billion.

In the "Fiscal and Debt Strategy Report" released on Tuesday by ministry said the debt accumulated in 2020 was equivalent to 115 percent of the GDP generated last year. The report also outlined the expected debt of MVR 79 billion would be equivalent to 128 percent of the GDP.

The debt of 79 billion includes an external debt of MVR 38 billion and an internal debt of MVR 41 billion.

The global halt the economic activities suffered impacted the debt and productivity of Maldives as well, according to the report.

When compared to the last five years, the state debt has increased by MVR 23 billion. When 2017 ended the state debt was MVR 44 billion, which included an external debt of 17 billion and an internal debt of 27 billion.

According to the Finance Ministry, the state debt an increased by MVR 13 billion from 2019 to 2020.

Despite the expected rise in debt by the time 2021 ends, it is also predicted that the national GDP will also increase by 15 percent.

Most of the debt is owed to China

According to the statistics released by the ministry, 38 percent of the external debt is owed to Export and Import Bank of China.

Another 38 percent of the external debt was money accumulated in buyer’s credit. Multi-lateral parties are owed 25 percent of the external debt while bi-lateral parties are owed 21 percent.

This report also included the strategy the government had developed in order to deal with the state debt. The government aims to not let the external debt increase more than 70 percent of the total debt. It also said they were aiming to decrease the average interest rate by three percent, and adding eight years to the debt repayment period.

The government also want to maintain the debt repayment at 30 percent of the nation’s GDP.

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