Maldives central bank fires stark warning over mounting debt

Maldives central bank on Monday fired a stark warning over the continuous financing of mega projects on foreign loans which it said could severely drain national reserve.

Maldives Monetary Authority (MMA) in its expert opinion of the proposed MVR28 billion state budget for next year to the parliamentary budget review committee said the country's continued dependency on foreign financial markets remains a major concern.

The foreign loans secured to finance mega development projects continues to be a burden on the country's GDP, MMA said.

The central bank estimated the country's foreign debt to balloon to USD1 billion by the end of next year which would severely drain the national reserve. MMA also said the budget deficit estimated to be MVR3.4 billion in 2016 had actually risen MVR67 billion. If immediate measures are not taken to find out the reasons behind the stark difference, the forecast budget deficit in the next few years could multiply, it said.

According to the MMA, the government would find it extremely difficult to sustain its current policy to cover the budget deficit through the sale of treasury bills and bonds to commercial and private banks next year as there is a MVR2.3 billion slide in current investment numbers.