Parliament approves sale of additional bonds

Maldives Parliament on Monday approved for Maldives Monetary Authority (MMA) to increase the number of bonds permitted to be sold by the Maldives government.

The budget for 2018 through 2022 allocated MVR 4.6 billion to be sold as bonds to foreign parties and MVR 930 million to local parties to raise funds for financing. However, central bank’s governor, Ali Hashim said the sale of additional bonds is now required, and a letter requesting the parliament’s opinion on the matter was sent to the entity. The letter outlined that the bank was working to ensure that the financing amount does not exceed the figure already included in the budget. However, the prospective sale of a bond to the State Bank of India (SBI) may increase the figure, said the governor.

The net financing figure included in the state budget is MVR 6 billion. The governor said the Attorney General’s Offices’ counsel on the matter is that the government can borrow more than MVR 6 billion within the year, and if the net financing figure is restored to MVR 6 billion or lesser before the end of the year, it can be considered that the government’s actions were in line with the state budget.

In that regard, Kinbidhoo MP and chair of public finance committee, Mohamed Nashiz proposed to permit the sale of additional bonds such that the net financing figure in the state budget is not exceeded by the end of the year. The proposition was supported by members of main-ruling MDP, with most noting that the country’s economical status is very dire due to the COVID-19 pandemic. The members stressed that the parliament must facilitate financing at this time even if it meant more debt. The motion was passed with the voted of 65 members.

Although the figure of the bond being sold to SBI has not been disclosed, AVAS has learnt that the government is attempting to sell of a US$ 250 million bond to SBI.