Minister of Foreign Affairs, Mr Abdullah Shahid, has blamed the former president Abdullah Yameen Abdul-Gayyoom for “driving the Maldives’ financial health down” and that “the State did not have the funds to pay its civil servants at the end of this month”.
Mr Shahid did not reference any documents or releases from any government-based or independent financial institution.
Mr Shahid estimates that this would not be possible without injecting a further USD$200 million into state coffers; and that the newly-elected Government of the Maldives was working to persuade India to offer that amount as free aid.
Mr Shahid’s statements come less than a week after the Maldives Inland Revenue Authority (MIRA) announced that it had collected MVR 986 million (USD$ 63million) in November 2018 alone. MIRA’s press release stated that this was an amount 5.2% greater than forecasted, and also 5.3% higher than the revenue collected in the some month of 2017. Likewise, MIRA had enjoyed a 4.0% increase on the revenue collected in October 2018 compared to a year ago, and also a 9.7% increase over what had been forecasted for the month of October when it collected MVR 1 billion (USD$ 64.7 million) for that month alone.
Mr Shahid also mentioned that the United Arab Emirates and the Kingdom of Saudi Arabia are currently working on providing the Maldives financial assistance. The Foreign Minister claims that the country should receive financial assistance and aid at the end of this month or the next.
He went on to claim that India would receive its loans from India at “very good” interest rates, and he proceeded to repeat the claim made on the campaign-trail that Mr Yameen had taken loans at “commercial rates”.
These were claims which had also been made by the current President Ibrahim Mohamed Solih during an interview on the pro-government RaajjeTV. On the programme, he had claimed that the rates had been at around 12%.
President Solih had also taken the opportunity of his inauguration speech to claim that state coffers had been “looted” and that the Maldivian population had been left in debt because of Chinese-funded projects. He “prompted calls for investigations into how contracts were awarded to Chinese companies during the previous administration”.
He said it wasn’t clear how much the state had lost, and that his transition team would find out that information in due time.
The Minister of Finance Mr Ibrahim Ameer had stated that the total external debt the State had incurred was USD$1.8billion, with USD$1.4billion from that amount having been taken from China.
According to the Chinese ambassador to the Maldives, Mr Zhang Lizhong, these loans had been granted as a 2% interest rate; not much higher than the 1.5% interest rate that’s reported to be offered by India.
Mr Shahid also mentioned that the Maldivian government had given an “extreme” number of “sovereign guarantees”. Mr Shahid therefore stated that the Maldivian government has been forced to negotiate very low interest rates from its loan requests from India.
Currently, Maldivian law does not permit the issuing of sovereign guarantees for loans with interest rates higher than 4%. It has been reported that “the previous government issued over MVR9 billion [USD$582 million] in sovereign guarantees, Sun Siyam Resorts Pvt. Ltd is the only private company to have received such a grant”.
Other recipients have all been state-owned companies. They had been the “State Trading Organization (STO) which was issued MVR 3.7 billion, Housing Development Corporation (HDC) which was issued 2.9 billion, State Electric Company Limited (STELCO) which was issued MVR 589 million and Maldives Industrial Fisheries Company (MIFCO) which was issued MVR 57 million.”
These allegations come with less than a week left before President Ibrahim Mohamed Solih has been scheduled to travel to meet with the Indian Prime Minister Narendra Modi, where it is believed that the two will sign agreements to establish a “permanent presence” of Indian military personnel on Maldivian soil. The Maldives currently plays host to roughly 60 Indian military personnel on account of an agreement signed in 2010 by Mr Mohamed Nasheed.
Indian media outlets have claimed that India will agree to offer the Maldives a loan of $700 million. The claimed need for these loans are so that infrastructural and development projects in the Maldives can continue and be completed.
As per Mr Shahid’s claims, The Wire reports that “a budgetary support of $200 million was also settled during the discussions in New Delhi, but negotiations are still underway on the disbursal schedule.”
Mr Shahid’s claims also come days after Mr Yameen Abdul-Gayyoom was requested to appear at the headquarters of the Maldives Police Service (MPS) for questioning. Independent journalist and political commentator, Mr Mohamed Bushry, had implied that this was a means to divert public attention away from the upcoming “deals with India” which the coalition government will be making.
Summoning YAG to the Police to investigate alleged corruption and money laundering is fine. But using that as a smoke screen to hide deals with India will not be acceptable. We do not want Indian “debt-trap”. Nor do we want Indian troops stationed at Gan or Hanimadhu.@ibusolih pic.twitter.com/oDCv9vJl7H
— Mohamed Bushry🇲🇻 (@modebush) December 13, 2018
Mr Shahid’s comments come on the same day that Mr Abdul-Gayoom’s accounts at the Bank of Maldives and the Maldives Islamic Bank were frozen by the Criminal Court on a request by the MPS. This is the first time that the accounts of any individual who had held the Maldivian presidency had ever been frozen.
With the lack of any corroborating financial information published by the newly-elected government, it is difficult to ascertain the truth behind Mr Shahid’s claims. What is known is that Mr Shahid’s allegations are inconsistent with previous established facts, and the new government’s behaviour has not shown the sensitivity required of any government inheriting fatal amounts of debt.
The swearing-in ceremony which saw Mr Ibrahim Mohamed Solih’s ascendancy to the president’s office was reported to have cost USD$2 million, and it was held in the heart of Male City, as opposed to the south-eastern Dharubaaruge Hall, as is customary.
More famously, an amount of USD$3.2 million has been set aside by the Solih administration’s Ministry of Education to provide breakfast meals to schoolchildren around the country. The Ministry of Youth and Sports has set aside an amount of USD$32,000 per month to all sports associations registered to the country. The Ministry of Tourism, headed by Minister Ali Waheed, has demanded an increase by USD$6.7 million for the marketing and promotion of the Maldives as a tourist destination.
A few days prior, the Majlis had decided to exempt duties imposed on diesel citing that it would benefit the fishing industry. The Bill amendment was proposed by prominent shipping tycoon and businessman, Mr Mohamed Mustafa, MP for Thimarafushi. It is not yet known whether this was decided upon after having conducted a review of the financial state of the Maldives, and it is not known whether the Minister of Economic Development was consulted prior to the decision.
According to the Maldives Monetary Authority, the country had imported USD$297 million worth of diesel in 2018 alone.
According to Fuel Supplies Maldives, as of October 2018, the wholesale rate for diesel had been cited as MVR 11.23 per litre (USD$0.73 per litre). The Maldives is not an oil producing nation, and instead buys its oil through STO’s Singapore branch. While oil-producing nations such as the Kingdom of Saudi Arabia (USD$0.13), Iran (USD$0.07) enjoy extremely cheap prices, other nations such as the UAE ($0.71), Russia (USD$0.68) enjoy only a slightly cheaper price than the Maldives does. Other nations (which also do produce oil) have much higher prices, such as the USA ($0.82), and China ($0.92).
In the face of financial meltdown, and given that the Maldives already enjoys fairly low diesel prices, why the Majlis would decide to reduce the amount of revenue the State received under the pretext of protecting the fishing industry; which contributes to less than 3% of the Maldivian economy; is unclear.
Mr Shahid’s claims are therefore suspicious.
The leader of the opposition Progressive Party of Maldives (PPM) Parliamentary Group Mr Ahmed Nihan Ahmed Manik criticised Mr Shahid’s comments by remarking that Mr Shahid should “stop running around with his beggar’s cup, resign, and hand the country back to President Yameen who ran the country without begging other countries”.
It remains to be seen how exactly the Maldives’ relationship with India will unfold. It also remains to be seen if the government is willing to share information regarding the country’s financial situation with the nation, and if the Foreign Minister’s claims are all part of the “smoke-screen”.