Parliament passes proposal to restructure state debt

The Parliament of the Maldives has passed the proposal to restructure the repayment of all state debt, except for the loans taken from foreign countries and international organisations.

The proposal was included in the report prepared by the Whole House Committee of the Parliament regarding state debt. The report was passed with votes from 55 out of the 67 parliamentarians present at the sitting on October 28.

The report revealed state debt starting from 2012 till now has risen to USD 11 billion. The report proposed state debt to be restructured or re-profiled by the Central Bank, Maldives Monetary Authority (MMA), with the help of local and international experts in the fields of finance and law. The proposal states a special committee should be formed to carry out the reprofiling, which must be completed and shared with the President and the Parliament within 8 months. The proposal requires Ministry of Finance to draft the necessary amendments to the Public Finance Act and the Fiscal Responsibility Act to carry out the reprofiling of state debt.

Furthermore, the report proposes a rollover of internal debt for the year 2021 and to defer the repayment of internal debt. The report also proposes the finance ministry to strengthen the policy on monitoring sovereign guarantees and to ensure projects which have sovereign guarantees issued by the state are monitored in accordance to a set schedule.

Deliberating on the report, Speaker of Parliament Mohamed Nasheed noted next year will be a very difficult year for the state financially, due to the increased debt. He expressed belief the grace period for loans taken by the state needs to be extended until 2024, considering the projected income of the state over the next few years. He also expressed hope the interest rate of some of the loans can be reduced.