PUBLIC DEBT BULLETIN ISSUE 5, June 2020 Ministry of Finance, Republic of Maldives Resource Mobilization and Debt Management Department For enquiries: [email protected] Contents Abbreviations ..................................................................................................................................................................................................................................... 3 1. Disbursed Outstanding Debt ..................................................................................................................................................................................................... 4 2. External Debt ............................................................................................................................................................................................................................. 6 2.1 Creditor Breakdown of External Debt ................................................................................................................................................................................ 6 2.3 External Debt Disbursements ............................................................................................................................................................................................ 8 2.4 External Debt Service ......................................................................................................................................................................................................... 9 3. Domestic Debt .......................................................................................................................................................................................................................... 10 3.2 Long Term Domestic Debt ................................................................................................................................................................................................. 10 3.3 Domestic Debt Servicing ..................................................................................................................................................................................................... 10 4. Government Guaranteed Debt and On-Lending ...................................................................................................................................................................... 11 5. Recent institutional developments in Debt Management ........................................................................................................................................................ 12 6. Summary of Debt Statistics ....................................................................................................................................................................................................... 16 2 Abbreviations KWD Kuwaiti Dinar LT Long Term ADB Asian Development Bank MACL Maldives Airports Company Limited AED United Arab Emirates Dirham MDB Multilateral Development Bank AIA Addu International Airport Private Limited MIFCO Maldives Industrial Fisheries Company AIIB Asian Infrastructure Investment Bank MMA Maldives Monetary Authority ASH Ahmed Siyam Holdings Private Limited MPAO Maldives Pension Administration Office ATM Average Time to Maturity MPL Maldives Ports Limited ATR Average Time to Refixing MRDC Maldives Road Development Corporation Limited BML Bank of Maldives Limited MTCC Maldives Transport and Contracting Company BOC Bank of Ceylon MTDS Medium Term Debt Management Strategy CNY Chinese Renminbi MVR Maldivian Rufiyaa CS-DRMS Commonwealth Secretariat Debt Recording and OFID OPEC Fund for International Development Management System PRB Pension Recognition Bond DeMPA Debt Management Performance Assessment PSDS Public Sector Debt Statistics DFI The Development Finance International Group RBI Reserve Bank of India DOD Disbursed Outstanding Debt RDC Reverse Dual Currency EUR Euro RMDMD Resource Mobilization and Debt Management EXIM Export-Import Bank of Department FENAKA Fenaka Corporation SASEC South Asia Sub regional Economic Cooperation FX Foreign Currency SAR Saudi Riyal GBP Great British Pound SDR Special Drawing Rights GDP Gross Domestic Product SFD Saudi Fund for Development GOM Government of Maldives SLA Subsidiary Loan Agreement GPE Global Partnership for Education ST Short Term HDC Housing Development Corporation Limited STELCO State Electric Company Limited IASL Island Aviation Services Limited STO State Trading Organization ICBC Industrial and Commercial Bank of China USD United States Dollar IDA International Development Association VIA Velana International Airport IFAD International Fund for Agricultural Development WAIR Weighted Average Interest Rate ING International Netherlands Group WB World Bank IsDB Islamic Development Bank IMF International Monetary Fund ITFC International Islamic Trade Finance Corporation JPY Japanese Yen KFAED Kuwait Fund for Arab Economic Development 3 1. Disbursed Outstanding Debt1 At the end of June 2020, DOD stood at MVR 74,330 million. Increase in domestic debt comes from primarily the issuance of treasury bills worth USD 150 million (equivalent MVR 2,311.5 million), subscribed by the State Bank of India, Male’ Branch. Figure 1 shows the trend in DOD from December 2017 to June 2020. Additionally, Government has received a rapid credit facility from IMF through MMA, amid the Covid-19 pandemic, amounting MVR 447 million during this period to support the balance of payment and subsequently as budget support to the Government. The increase in direct external debt is mainly driven by high disbursements made for VIA terminal development project, which in total added MVR 284 million to the direct external DOD during this period. The increase in publicly guaranteed debt during this period is mainly due to the disbursement of MVR 2,312 under the guarantee issued to Maldives Monetary Authority for USD swap facility and also from disbursements made under loans for which Government has provided Sovereign Guarantees to state owned enterprises (SOEs) in prior years. Many of the projects being implemented with the support of sovereign guarantees were expected to be completed during 2020, but the ongoing Covid-19 pandemic might affect the As at the end of June 2020, the total debt increased by MVR 10,655 implementation of the projects which might result in delays in million compared to June 2019. This was mainly driven by an completion. increment in domestic debt and disbursements under previously issued publicly guaranteed loans during this period. The domestic debt increased by 20% during this period, while the publicly guaranteed debt increased by 32%. The direct external debt Total public and publicly guaranteed debt have increased by 17% increased by 2% during this period. between June 2019 and June 2020. Publicly guaranteed debt 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. 4 increased by 32% since June 2019 and stood at MVR 16,622 million At the end of June 2020, the total debt to GDP stood at 128%. at the end of June 2020. Figure 3 shows the trend in debt as a percentage of GDP from Dec Figure 2 shows the comparison of the change in shares of Disbursed 2017 to June 2020. Outstanding Debt for June 2018, 2019 and 2020. Figure 3: Disbursed Outstanding Debt as a percent of Gross Figure 2: Shares of Disbursed Outstanding Debt 2018-2020 (Inner Domestic Product, Dec 2017 - June 2020 Ring: June 2018; Middle Ring: June 2019; Outer Ring: June 2020) The sudden increase in Debt to GDP was mainly influenced by the sudden decline in GDP due to the ongoing Covid-19 pandemic. GDP declined by 33% compared to June 2019. This has made it even more difficult to meet the debt targets outlined in the Fiscal Responsibility Act. 5 Key Activities, January-June 2020 Key Activities, January-June 2020 (continued) Loan signing - OFID Outer Island Harbors, Water Supply and Sewerage Grant signing – Canada Fund for Local Initiatives for Sheltor and provision of Facilities Project basic needs for homeless and vulnerable communities impacted by Covid-19 in Loan and grant signing - WB COVID-19 Emergency Response and Health Male', Maldives System Preparedness Project Grant – Japanese Government: Economic and Social Development Programme Loan and grant signing - WB Maldives Urban Development and Resilience 2020 - Equipment for Customs Project Grant – Japanese Government: Economic and Social Development Programme Loan signing - IMF Rapid Credit Facility from IMF 2020 - Provision of Medical Equipment Loan signing - IsDB COVID-19 Amendment to Istinsna'a Agreement and its High Level Meetings held virtually to discuss Covid-19 and Support between related Agency Agreement GOM and MDBs and Arab Funds Loan signing – OFID Public Sector Investment Program Budgetary Support Submission of first PSDS of Maldives Loan Commencement of Semiannual balance confirmation of direct loans Loan and grant signing – WB COVID-19 Emergency Income Support Project Emergency Grant assistance from Japanese Government to UNICEF and Red Loan signing – EIB COVID-19 Rapid Response to Maldives Crescent to assist GOM in to respond to COVID-19 Loan and grant signing – ADB COVID-19 Active Response and Expenditure Grant Assistance from USA to support economic recovery amid COVID-19