Shainee: Our methods will generate income, reduce debt

Fisheries Minister Dr. Mohamed Shainee said on Wednesday that the government was fully aware of how to reduce national debt, and were sure their economic policies would lead to more per capita income for the people of Maldives.

Shainee made the statement during press conference held by Economic Council after World Bank warning that the major development projects the country was undertaking could worsen the already dire national debt situation of the country.

In response to a question posed by a reporter from “Sun”, Shainee said that government was fully aware of how to lower national debt. And that if the government goes forward with its economic reforms, GDP per capita of the country would increase to USD 12,000.

“We are fully aware of what we are doing. Running these projects are the only way this government can provide the prosperity were want for our people,” said Shainee.

World Bank statistics show debt level at 73.1 percent of GDP in 2015. And estimate the rate to rise to 83.1 percent of GDP by end of 2016, and to 109 percent by end of 2018.

Shainee said that loans taken by the government would turn into assets once the investment was covered.

He said that the government was running the projects responsibly, fully aware of the risks and without any wastage.

He said that the government was fully confident they can go ahead with the projects, and were undertaking the projects for the welfare of people.

Shainee said that some were taking the World Bank report as bad news for investors. And that they never said in the report that investing in Maldives would be harmful to the country.

Finance Minister Abdulla Jihad said that World Bank and Maldivian government used different methods in calculating the country’s debt.

Finance Minister Abdulla Jihad speaking during Economic Council press conference on May 11, 2016. Sun photo: Yoosuf Sofwan Rasheed

Jihad said that World Bank included loan guarantees and unpaid bills in their calculations. And that the guarantees would not turn to debt.

He said that the loans taken for the major development projects were flexible. And government could repay the loans without any strain.

“The loan by Saudi Fund is for 25 years with 2.5 interest rate, with a grace period of 5 years. Islamic Development Bank loan has similar terms. Loans given by Chinese government are also concession loans,” said Jihad.

He said that though it may be difficult when the loans are paid. They will become great assets to the country.