Former President Abdulla Yameen Abdul Gayoom has said that the Bank of Maldives (BML) is at imminent risk due to repeatedly issuing large sums of money to cover government expenditure.
While seated in the audience during a People’s National Front (PNF) rally on Thursday night, Yameen said BML’s board should work to ensure that the bank is not excessively exposed to risk and that it is not a venture lender. BML should not be exposed to such risk, he said.
Yameen alleged that the bank recently released nearly a billion Rufiyaa to the government after its Risk Assessment Department had advised against such action.
“The Risk Assessment Department has definitively told us not to do this. The bank has already lent MVR 600 million to pay the salaries of state employees,” Yameen said.
The biggest risk in lending so much money to the government as a single client is that there is nothing to be done to recover the money if the government does not repay it, the former president—often cited, even by critics, for his keen economic and financial insight—outlined.
“The state won’t take the government to court, and the bank cannot sue. The MMA won’t underwrite this lost money,” he said, driving the point home.
According to Yameen, every day that the government does not recover the money is a day that prevents BML from recovering more money by issuing loans.
Yameen, citing his experience as a former BML board member, said that if the bank’s risk assessment department flags something, their direction needs to be followed.
“But here we are, because there are political people on the board now, the board has done it [lent huge sums to the government as a single client],” he said.
“That is not the way a responsible board of a bank should act,” the former president said.
Yameen’s statements come amid reports that the government took an MVR 800 million loan from BML in the form of Treasury bills (T-bills) to pay public sector salaries this month. Details about the terms of the loan, including its duration and interest rates, have not yet been disclosed, and neither BML nor the Ministry of Finance has commented on the issue.
Experts attribute the government’s need for short-term borrowing due to cash flow challenges exacerbated by recent domestic policies, with analysts noting that current fiscal management has placed a heavy burden on public finances.
Additional reporting by Ibrahim Inaan
