The government, in January, settled a US$50 million (MVR 771 million) treasury bond issued to the State Bank of India (SBI) via a loan from the Bank of Maldives (BML), it has been revealed. The treasury bond sold to SBI last year was facilitated through the Indian government during the Ibrahim Mohamed Solih administration.

According to local media reports quoting an inside source, the loan was taken after SBI chose not to roll over, upon maturity, the US$50 million bond issued to the bank during the Solih administration.

Meanwhile, the government still has to pay out a further US$100 million (MVR 1.5 billion) to SBI. The Indian bank was issued a total US$150 million (MVR 2.3 billion) treasury bond during the previous administration, with the bank requested to pay out three US$50 million (MVR 770 million) instalments, which went towards budget support — the government is due to make the remaining two payments of US$50 million each to SBI in April and July.

According to the inside source, the Solih administration had accepted the US$150 million facilitated via the Indian government under an understanding that the initial loan would later be converted to grant aid. However, SBI chose, over the last five years, to roll over the amount each year, the source is quoted as saying.

The Mohamed Muizzu administration facilitated the US$50 million BML loan through the state owned enterprise (SOE) Maldive Airports Company Limited (MACL) in December last year because BML had reached its lending threshold to the government.

Neither the administration nor other state agencies have disclosed additional information on the transaction.

BML, in January, suspended the issuance of dollars for telegraphic transfer (TTs) to companies paying for overseas goods after it issued the loan. While BML had already refused to implement the increased US dollar limits to students abroad, as decided by the Cabinet, the bank is also reportedly considering further tightening foreign transaction limits on cards issued for Rufiyaa accounts.

Meanwhile, the Ministry of Finance, also in January, issued a Request for Proposals (RFP) seeking institutional investors to secure up to US$550 million through loans and treasury securities in line with the agency’s 2024 Annual Borrowing Plan (ABP).

According to the ministry’s ABP, the state will need to cover a MVR 16.31 billion deficit in 2024. The 2024 budget projects a MVR 14.08 billion deficit while the principal repayments of external and domestic debt is set to cost the state an additional MVR 2.23 billion. The ministry is looking to fund the gap, as per the ABP, by issuing treasury bills and treasury bonds priced at MVR 3.95 billion within the domestic market and to raise the remaining MVR 12.36 billion through project loans, sustainable financing, loans, and bonds via external sources.