The Maldives government has borrowed MVR800 million (US$51.8 million) from the Bank of Maldives to settle unpaid bills.
The finance ministry told the parliamentâ€™s public accounts committee Tuesday that the government owed MVR627 million (US$41 million) to various parties at the end of 2016 along with MVR377 million (US$24 million) owed as of March 8.
The loan was unforeseen in the 2017 budget and obtained despite record levels ofÂ tax revenue.
Finance Minister Ahmed Munawar signed the loan agreement on March 28 following approval from the presidentâ€™s office on March 12. With an interest rate of six percent payable monthly and a one-year maturity, the finance ministry estimates that interest payments would amount to MVR48 million (US$3 million).
Majority Leader Ahmed Nihan, chair of the public accounts committee, shared documents sent by the finance ministry with committee members Tuesday morning.
But Minority Leader Ibrahim Mohamed Solih proposed seeking assurances from the ministry that the money will be used to settle bills and outstanding payments.
MP Ahmed â€˜ADKâ€™Â Nashid from the main opposition Maldivian Democratic Party observed that according to the finance ministryâ€™s letter the government plans to repay the loan from the sale of sovereign bonds.
Some US$200 million was raised earlier this month from the countryâ€™sÂ debut sovereign bond issuein the international finance market.
The International Monetary FundÂ warnedÂ last year that the Maldives is facing â€œa high risk of external debt distressâ€ due to financing large-scale infrastructure projects entirely with foreign loans.
The IMF and the World Bank predicts debt to reach 121 percent of GDP by 2020. But the government says its flagship projects such as the China-Maldives Friendship Bridge and airport expansion are â€œnecessary investmentsâ€ with longer-term payoffs.