MINISTRY OF FINANCE, REPUBLIC OF MALDIVES PUBLIC DEBT BULLETIN ISSUE 3, June 2019 Resource Mobilization and Debt Management Department For enquiries: [email protected] Contents Abbreviations ..................................................................................................................................................................................................................................................................................... 3 1. Disbursed Outstanding Debt ................................................................................................................................................................................................................................................. 4 2. External Debt ........................................................................................................................................................................................................................................................................... 7 2.1 Creditor Breakdown of External Debt ........................................................................................................................................................................................................................ 7 2.2 Currency Composition of External Debt ................................................................................................................................................................................................................... 8 2.3 External Debt Disbursements ...................................................................................................................................................................................................................................... 9 2.4 External Debt Service .................................................................................................................................................................................................................................................... 9 3. Domestic Debt ....................................................................................................................................................................................................................................................................... 10 3.1 Short-Term Domestic Debt ........................................................................................................................................................................................................................................ 10 3.2 Long Term Domestic Debt ......................................................................................................................................................................................................................................... 11 3.3 Domestic Debt Servicing ............................................................................................................................................................................................................................................. 11 3.4 Domestic Debt by Ownership .................................................................................................................................................................................................................................... 12 4. Government Guaranteed Debt and On-Lending ............................................................................................................................................................................................................. 13 5. Summary Debt Statistics ....................................................................................................................................................................................................................................................... 15 6. Glossary ................................................................................................................................................................................................................................................................................... 16 2 Abbreviations ADB Asian Development Bank JPY Japanese Yen AED United Arab Emirates Dirham KFAED Kuwait Fund for Arab Economic Development AIA Addu International Airport Private Limited KWD Kuwaiti Dinar AIIB Asian Infrastructure Investment Bank LT Long Term ASH Ahmed Siyam Holdings Private Limited MACL Maldives Airports Company Limited ATM Average Time to Maturity MIFCO Maldives Industrial Fisheries Company ATR Average Time to Refixing MMA Maldives Monetary Authority BML Bank of Maldives Limited MPAO Maldives Pension Administration Office BOC Bank of Ceylon MPL Maldives Ports Limited CNY Chinese Renminbi MRDC Maldives Road Development Corporation Limited CS-DRMS Commonwealth Secretariat Debt Recording and MTCC Maldives Transport and Contracting Company Management System MTDS Medium Term Debt Management Strategy DeMPA Debt Management Performance Assessment MVR Maldivian Rufiyaa DFI The Development Finance International Group OFID OPEC Fund for International Development DOD Disbursed Outstanding Debt PRB Pension Recognition Bond EUR Euro RBI Reserve Bank of India EXIM Export-Import Bank of RDC Reverse Dual Currency FENAKA Fenaka Corporation RMDMD Resource Mobilization and Debt Management FX Foreign Currency Department GBP Great British Pound SASEC South Asia Subregional Economic Cooperation GDP Gross Domestic Product SAR Saudi Riyal GOM Government of Maldives SDR Special Drawing Rights HDC Housing Development Corporation Limited SFD Saudi Fund for Development IASL Island Aviation Services Limited SLA Subsidiary Loan Agreement ICBC Industrial and Commercial Bank of China ST Short Term IDA International Development Association STELCO State Electric Company Limited IFAD International Fund for Agricultural Development STO State Trading Organization ING The ING Group USD United States Dollar IsDB Islamic Development Bank VIA Velana International Airport IMF International Monetary Fund WAIR Weighted Average Interest Rate ITFC International Islamic Trade Finance Corporation WB World Bank 3 1. Disbursed Outstanding Debt1 The increase in external debt is mainly due to disbursements made for At the end of June 2019, DOD stood at MVR 64,984 million, an increase the VIA Development Project. While the project progress had stalled of 18% from June 2018, and 8% from December 2018. due to several proposed contractual changes, the Government was able to resolve the issues and expedite work early in the year, and the project Figure 1 shows the trend in DOD from December 2016 to June 2019. is now expected to move forward at a reasonable pace. Increase in domestic debt comes from primarily the issuance of treasury bills worth USD 100 million, subscribed to by the State Bank of India, Male’ Branch. The arrangement between the Government of India and Maldives with regard to this investment is that all amounts due would be settled by the Indian Government, eliminating any debt burden for Maldives from this investment. A further USD 50 million is scheduled to be issued during the later half of the year, also under the same arrangement. While GOM had issued one new guarantee in the first half of 2019, the increase in government guaranteed debt as at end June 2019 mainly comes from high disbursements made under loans for which government has provided sovereign guarantees in prior years. Many of the projects being implemented with the support of sovereign guarantees are approaching a close within the next year, and guaranteed debt is expected to gradually reduce from 2020 onwards. Although the share of external debt in total debt has not changed significantly in recent years, the share of domestic debt has reduced from In the six months up to June 2019, total debt increased by MVR 4,597 59% to 45% and the share of guaranteed debt has increased from 7% to million, with the increase largely coming from guaranteed debt. External 22% when compared June 2017 and June 2019. debt increased by 5% during the six months, while domestic debt increased by 7% and guaranteed debt increased by 14%. 1 This section includes direct borrowing of the budgetary central government and indirect borrowings that are explicitly guaranteed by GOM. Wherever explicitly guaranteed debt is included will be specified throughout this Bulletin. Figure 2 shows the comparison of the change in shares from June 2017 to June 2019. Given the ambitious development plan of subsequent governments, requiring high levels of investment and expenditure on development projects, attempts to meet the debt targets stated in the Fiscal At the end of June 2019, the total debt to GDP stood at 72%. This is an Responsibility Act (7/2013) has proved unsuccessful thus far. Renewed increase of 5% compared to June 2018, but a decrease of 1% compared efforts will be made in coming years to achieve greater compliance to to December 2018. the existing laws and regulations that guide debt contracting and management, as well as to introduce best practices into the existing legal Figure 3 shows the trend in debt as a percentage of GDP from framework, streamlining across different legislations. December 2016 to June 2019. 5 Key Activities, Jan – Jun 2019 Key Events Planned, Jul – Dec 2019 Loan agreement signed with EXIM India - Line of credit Submit the MTDS 2020-2022 to Peoples’ Majlis Loan and grant agreement signed with ADB - National