The Islamic Development Bank has pledged facilities worth more than US$117 million to finance infrastructure and waste management projects.
Finance Minister Ahmed Munawar secured the funds during meetings held on the sidelines of the IDB’s annual meeting in Jeddah, Saudi Arabia from May 16 to 21, the finance ministry said in a press statement Monday.
Munawar met with IDB President Dr Bandar M H Hajjar as well as officials from the IDB’s Awqaf and Waqf unit, which agreed to increase the funds allocated for projects proposed by the Islamic ministry, it added.
The CEO of the IDB’s Islamic Trade Finance Corporation, Hani Salim, agreed to increase the amount of loan assistance pledged for business, fisheries and harbour construction projects and to provide expert assistance on trade finance.
Munawar also met with Khalid al-Abudi, CEO of the Islamic Corporation for the Development of Private Sector, a shareholder of the Maldives Islamic Bank, and discussed ways to broaden the bank’s services. The ICD pledged expert assistance for developing the Islamic finance sector in the Maldives.
The director general of the Islamic Solidarity Fund meanwhile pledged assistance for developing Waqf and Zakat affairs, Islamic tourism, and waste management. Senior officials of the Islamic Research and Training Institute agreed to conduct Islamic finance training programmes in the Maldives.
The AAA-rated IDB is an Islamic finance institution made up of 57 countries from the Organisation of Islamic Cooperation. Saudi Arabia is the Jeddah-based multilateral lender’s largest shareholder.
During his trip, the minister also briefed officials from the OPEC Fund for International Development and the Kuwait Fund about ongoing projects. “[The officials] gave assurances that important new projects will be signed before July this year,” the finance ministry said.
Loan agreements worth US$200 million were signed last year with the Saudi Fund for Development, the Kuwait Fund and the OPEC Fund to finance the expansion of the Velana International Airport. The Saudi Binladin Group was enlisted in May 2015 to build a new passenger terminal for an undisclosed amount.
Both the opposition and international financial institutions have warned that the Maldives is facing a high risk of debt distress due to the current administration’s unprecedented infrastructure scale-up, which includes construction of a bridge to connect the capital with a new urban centre under development in Hulhumalé.
At a press briefing earlier this month, Munawar defended the government’s accumulation of debt to finance the flagship projects as “necessary investments” with longer-term payoffs.
After issuing a stable outlook rating for the Maldives in mid-May, global credit rating agency Fitch meanwhile noted that measures to “avoid a blow-out of government debt” were laid out in the 2017 budget to increase revenue and reduce expenditure.
“Some of these projects seem to have the potential to facilitate a surge in tourism in a few years, but execution of so many large projects at the same time has posed serious fiscal challenges,” Fitch observed.