The Ministry of Finance and Planning has repaid a USD100 million loan taken from a foreign financial agency during the previous Maldivian Democratic Party (MDP) government.
The MDP government borrowed the loan from Cargill Financial Service International, a United States-based financial agency in 2022 as budget support, rather than to fund a major project. The terms of the loan included an interest rate of 7.15 percent, with repayment over three years. As a result, the government paid an additional USD26 million as interest on top of the original USD100 million loan.
The loan has now been repaid in full by the government of President Dr Muhammed Muizzu amid allegations that the government lacked the capacity to meet its loan obligations for the year. Refuting these claims, a Finance Ministry official said all loans were being repaid in accordance with the loan agreements. The Finance Ministry also noted that there have been no issues in meeting the Maldives’ debt commitments.
In addition to the USD100 million borrowed from Cargill Financial Services International, the former government borrowed millions in loans in the name of implementing major projects. However, many of the projects have not been completed while some are at a standstill. The Finance Ministry noted that by the end of the former administration, in addition to foreign debt, significant amounts were owed to local companies that implemented various projects. Therefore, in addition to managing foreign debt, the government is also making payments owed to local companies, the Ministry said.
The previous government's fiscal policies led to significant financial challenges for the Maldives. However, President Dr Muizzu’s government has implemented strong measures to get the economy back on track. With these policies, the government believes that this year will be a year of economic growth and prosperity for the people.