The Maldives central bank has warned of dwindling national reserves as the rate of foreign borrowing increases.
Governor Ahmed Naseer of the Maldives Monetary Authority (MMA) sounded the alarm in a statement sent to the parliamentary budget review committee, which met Monday.
The committee cancelled two hearings they had scheduled with him and the auditor general, notifying media that their opinions and recommendations would be submitted in writing.
Committee chair MP Ahmed Nihan said the MMA boss had noted that local borrowing to finance the budget had decreased with foreign borrowing increasing. Naseer also said that debt on the GDP rate was rising, Nihan told the committee.
Finance Minister Ahmed Munavvar told parliament that, at the end of 2018, public debt would be around MVR43 billion or 60 percent of GDP.
The IMF and the World Bank predicts Maldivian debt to reach 121 percent of GDP by 2020.
According to MMA projections shared with the committee foreign debt was MVR11.7 billion at the end of 2016, rising to MVR17.4 billion at the end of this year and to MVR21.7 billion at the end of 2018.
The governor warned of the impact these rises would have.
“So, a significant amount would be spent from the state reserve. [Governor] noted the importance of enacting measures to limit the impact of this on the reserve and measures to increase the reserve,” Nihan said, reading from the governor’s statement.
Naseer was critical of the government’s previous budgets.
“A basic problem of underestimating expenditure and overestimating revenue has been noticed in the previous budgets. [Governor] recommended that expenses should be made according to the budget and to ensure that projected revenue is met in order to not repeat the same problem in 2018,” Nihan told the committee.
Naseer noted that the 2016 budget projected a deficit of MVR3.4 billion while the actual deficit at the end of year was MVR6.7 billion.
“The 2017 budget’s projected deficit does not match the revised deficit figures for the year. It is recommended that measures be taken so that this will not repeat.”