The Abu Dhabi Fund for Development has pledged a US$40million loan to develop the Maldives’ main airport, the finance ministry has said.
Finance Minister Abdulla Jihad, who is touring the Arabian Gulf, issued a statement today saying Mohamed Saif Al Suwaidi, the ADFD’s director general, had promised to approve the loan at the fund’s next meeting.
The interest rate for the loan was not specified.
The finance ministry said it is also in talks with the Islamic Development Bank to obtain a US$110million loan for the Ibrahim Nasir International Airport’s development.
The ADFD and IDB loan will add on to a US$373million loan secured from the Chinese EXIM Bank in December to for airport development, meaning that the total cost of the project could be as high as US$523 dollars.
Tourism Minister Moosa Zameer signed a “preferential buyer credit loan agreement” with the EXIM bank during a December visit visit to China. The funds will be used to build a new 3.2 kilometre runway, reclaim land, and develop a fuel farm and a cargo complex, he said.
The runway project has been awarded to the Chinese Beijing Urban Construction Group.
The EXIM Bank loan has to be repaid in 20 years with a five-year grace period, Zameer said.
Neither Zameer nor Jihad were answering calls at the time of going to press.
Zameer previously said the Maldives could welcome as many as 7.5million tourists a year with airport development. Some 1.2million tourists visited the country last year.
GMR, an Indian company, is meanwhile seeking nearly US$1billion as compensation from the Maldives for abruptly terminating an airport development contract signed in 2011.
A Singaporean arbitration tribunal is due to determine the amount of compensation to be paid to the GMR-led consortium. The tribunal ruled last year that the previous government had “wrongfully” terminated a “valid and binding” concession agreement.
The government says the payout is likely to be “a manageable” US$300 million.
The US$511 million agreement – signed during the tenure of former President Mohamed Nasheed – represented the largest foreign direct investment in the Maldives history.
The pay out and additional loans will place severe pressure on the Maldives’ foreign reserves.
The government is already grappling with high external debt that is expected to rise with several mega projects in the pipeline. According to the central bank, Maldives’ external debt stood at US$688million by the end of 2015.