State debt estimated to reach MVR26 billion

Minister of Finance Abdullah Jihad said today that the internal and external debt of Maldives is estimated to be at MVR26 billion by the end of 2012.

He said that budget debt for this year alone is at around MVR6 billion.

Jihad said that the government has no option but to borrow money, due to several expenses having been made outside of the available budget.

He said that MVR11 billion will be received as budget income, while budget expenditure is estimated to be around MVR14 billion.

The debt for this year was earlier estimated to be at MVR3.8 billion.

Debt at the end of last year was MVR23 billion, which was about 115 percent of the GDP.

Debt at the end of 2008 was MVR9.8 billion.

“We are trying to reduce the debt before the end of the year,” Jihad said.

Jihad informed that there are T-bills worth MVR5.3 billion, and a deficit of the same amount will have to be tackled unless the T-bills are rolled over.

He noted that banks hesitate to purchase T-bills due to the financial difficulties being faced by the government.

“We are having extreme difficulty managing the cash flow. We are asking banks to roll the T-bills every day, but the problem is the huge gap that needs to be financed,” he said.

While loans are necessary to make up for the budget deficit, Jihad said that banks were unwilling to even discuss giving loans before the CNI released its report.

He said that some banks have agreed to lend money subsequent to the release of the report.

Jihad said that efforts are under way by ministers and the President to obtain loans.

He stressed that despite the huge state debt, there is no way to finance the budget other than borrowing money.