Saudi Arabia grants US$80m loan for Hulhumalé development

The Saudi Fund for Development has granted a US$80 million loan to finance infrastructure development projects in the reclaimed artificial island of Hulhumalé, a suburb of capital Malé.

Speaking at a ceremony held this morning for signing the loan agreement, finance minister Abdulla Jihad said the loan had been arranged within two to three months, which was “a record” in the ministry’s history and demonstrated the close ties between the Maldives and Saudi Arabia.

Saudi Arabia has historically provided significant financial assistance to the Maldives, Jihad said, but previous loan assistance ranged from US$20 to US$30 million.

“Now they’re giving US$80 to US$100 million and even higher than that,” he said.

Jihad said the loan is to be repaid in 25 years at an interest rate of two percent after a five-year grace period.

Following President Abdulla Yameen’s official visit to Saudi Arabia in March, fisheries minister Dr Mohamed Shainee said the Saudi government also assured loan assistance to develop the Ibrahim Nasir International Airport (INIA).

Shainee said today that an agreement will be signed in the near future for a US$100 million loan.

In February, the government revealed that the estimated cost of the INIA development and expansion project was US$845 million. The government had previously announced it was seeking a US$600 million loan from China and Japan for airport development.

Speaking at today’s ceremony, vice chairman of the Saudi Fund, Yousef al-Bassam, assured the Maldives of Saudi government’s assistance in the future for socio-economic development projects.

“We in the in the kingdom greatly admire the sincere and continued efforts of the government of Maldives for promoting social and economic well-being of its people,” he said.

In addition to a US$20 million grant for budget support in May, the Saudi Arabian government had also provided US$1 million as grant aid to finance the feasibility study for a transhipment port in the Maldives’ northernmost atoll.

The ‘iHavan’ project involves the development of a transhipment port, an airport, offshore docking and bunkering facilities, an export processing zone, real estate businesses, and tourism facilities.

Hulhumalé urban development

Some 240 hectares of land was reclaimed earlier this year under phase two of the Hulhumalé development project, adding to the 188 hectares reclaimed in 2002.

Housing Development Corporation (HDC) managing director Mohamed Simon told the press after today’s ceremony that the US$80 million loan will be used to finance four projects.

These include sheet piling 1,200 metres of land, creating a waterway or channel between land reclaimed under phases one and two, connecting the phase two mainland and an ‘economic zone’ via seven small bridges, and constructing two harbours in the yacht maria area and economic zone.

The projects will be completed in about three years, he said.

The current administration’s flagship ‘Youth City’ project in Hulhumalé will “offer housing solutions to the Maldivian people” and employment opportunities, Simon said.

“We estimate that more than 60,000 jobs will be created by the economic activities planned and designed under Hulhumalé phase two,” he said.

In January, President Yameen said the government hopes to increase Hulhumalé’s population to 220,000 and urged residents of islands with small populations to migrate to the new city.

According to the 2014 census, the population of the Maldives stands at 341,256 people, of which 133,019 reside in Malé.

Yameen had previously said that the ‘Youth City’ will be developed with a ‘technopolis park’, entertainment, and sports facilities, and facilities for tourism and fisheries industries.

The government is also planning to build a bridge connecting Malé and Hulhumalé with assistance from the Chinese government.