The Edition


Indian aid will not increase Maldives' debt: President Solih

Fathmath Shaahunaz
19 December 2018, MVT 17:37
President Ibrahim Mohamed Solih speaks at a press conference held December 19, 2018, at the President's Office. PHOTO: NISHAN ALI/MIHAARU
Fathmath Shaahunaz
19 December 2018, MVT 17:37

President Ibrahim Mohamed Solih on Wednesday declared that India's promised financial assistance of USD 1.4 billion to Maldives would not increase the archipelago's national debt.

The president made the guarantee at the President's Office, during his first press conference since his inauguration on November 17.

Prime Minister of India, Narendra Modi, had announced India's decision to provide a credit facility of USD 1.4 billion to Maldives during President Solih's recent three-day state visit to the neighbouring country.

Sharing details of India's promised assistance, President Solih stated that USD 200 million of the credit line is allocated as budget support, out of which USD 50 million will be free aid. India is to invest the remaining USD 150 million in T-bills.

"As you know, the previous administration sold T-bills for very high interest rates, like five percent, six, eight... But under our agreement with India, [the interest rate for] T-bills will be 1.5 percent", he said.

President Solih noted that India will also provide USD 400 million for currency swap, which would help sustain the state's foreign reserve.

The president further highlighted that the line of credit extended USD 800 million to finance development projects in Maldives.

"That doesn't mean we take USD 800 million in bulk and fall into debt. Instead, India will loan the required amount of funds for projects proposed by the government".

According to President Solih, several conditions are attached to the loans, such as the mandatory inclusion of a local party while choosing contractors for projects.

Asserting that his administration did not enter into any agreement with India that could compromise the independence and sovereignty of Maldives, the president refuted recent rumours of his government planning to establish a foreign military base in the country.