Maldives central bank has expressed skepticism over the proposed revenue generation from the sale of Islamic and conventional bonds to foreign investors.
According to the proposed state budget for next year, the issuance of sovereign Islamic bonds to foreign parties is the first Islamic financial instrument to be sold by the Maldives.
The government hopes to raise MVR1.44 billion in Sukuk issuance and would divert the entire funds to a new 25 storey hospital project.
According to the budget, funds for the remaining key projects would be raised through sale of conventional bonds.
However, in its opinion to the parliamentary budget review committee, Maldives Monetary Authority (MMA) said the government would find it extremely difficult to issue the bonds in favourable terms to the archipelago.
Though the recently publicized country's soverign credit ranking would help attract investors, MMA expressed doubts over whether the island nation would be able to attract foreign investors in accordance with the terms and conditions favourable to the government.
MMA had also expressed fears over the proposed measures to boost revenue which it said would increase dependence on the domestic market to plug the budget deficit if the government fails to implement the measures.
The government expects to raise MVR2 billion (US$130 million) in additional revenue.
With spending projected to reach MVR22.5 billion, a fiscal deficit of MVR4.3 billion or 4.4 percent of GDP is expected.