Maldives' debt managed in a pro-market manner: Finance Minister

Finance Minister Ibrahim Ameer has said that the Maldives' debt is being managed in a pro-market manner.

Speaking at the Parliament's Public Finance Committee on Monday, the minister said the Maldives' debt should be managed in a market-friendly manner and that the government aligned its actions according to that. He noted that attempting to restructure the country's debt in other ways would be detrimental to the country.

"There is a lot of talk about debt restructuring. The question is whether we need to restructure our debt. Is there debt to be restructured? When we first took over in 2019, there were loan sunny side bonds worth 250 million euros that could be restructured," the minister said.

Ameer further said that since then, work had been done to restructure the debt in a market-friendly manner.

"Initially, in 2019, we raised three more years for the USD 100 million payment to ADF due in 2023. We have added a further five years to the USD 250 million bond," Ameer said.

Responding to the talk on debt restructuring, Ameer said this is market-friendly debt management, and if debt restructuring is carried out, Maldives will be in technical default.

"If we attempt debt restructuring like that, it will be difficult for us to raise money from the global debt capital market. That can also be done through an IMF program. The confidence in the financial system will be lost with such a move. Not only the government but also the private sector will find it difficult to get loans. At the same time, free aid and trade between countries will also suffer," he said

The minister said the history attests to the fact that the Maldivian government always paid its debts regularly.

"I have confidence that debt service will be maintained even in the future. In 2019, debt to GDP stood at 69 percent. It was expected to fall to 50 percent in 2020," he said.

"We must consider if we were in a position to restructure our debt in 2019. No.. Even then, we were in a position where our debt could be paid off by running a debt budget. Our capacity to repay was at 12 percent," he said.

According to the Finance Ministry, the Maldives' debt will reach MVR 100 billion this year.