Auditor General’s Office has revealed the previous administration had issued over USD 480 million as sovereign guarantees in violation of the set policies and regulations.
The audit report on sovereign guarantees for the year 2018 revealed the previous administration had failed to appoint an independent auditor to review the proposals for sovereign guarantees, as specified in the policies. The report noted failure to adhere to the regulations on issuing guarantees could have dire consequences as the state would have to take the responsibility of repaying any loans taken under a sovereign guarantee, if the beneficiary fails to pay.
The audit report highlighted issues in providing guarantees worth USD 327 million and USD 65 million to Housing Development Corporation (HDC) for two separate housing projects in 2016. In this regard, the report noted the contracts for both projects have been terminated after the contractor failed to provide performance security, although it is still not clear if the guarantee issued by the state has been paid back.
The current administration has also previously stated the state debt had increased significantly due to the large number of sovereign guarantees issued by the previous administration.