Debt un-sustainability analysis
A look at public debt in 2022; and beyond.
The Government estimates total debt (including government guaranteed debt) to reach MVR94 billion by the of 2021, which is 122 percent of GDP. This includes MVR46.7 billion in domestic debt, MVR 33 billion (USD2.1 billion) in external debt, and MVR14.3 billion (USD927.4 million) in guaranteed debt.
According to the estimates in the budget submitted to parliament, total debt, by the end of 2022, is estimated to reach MVR103 billion (USD6.7 billion), which is 118 percent of GDP.
External Debt
By the end of 2018 the total external debt was at USD 1.3 billion. However, with a 62 percent increase, total external will reach USD2.1 billion by the end of 2021 and reach an alarming USD2.7 billion in 2022. The main contributing factor for the rise in external debt in 2021 is the USD500 million sukuk issued this year. The biggest contributor to external debt is buyers’ credit with a 24.2 percent share, and securities with a 21.9 percent share of total debt. Debt from multilateral institutions has a share of 15.5 percent, while bilateral debt is at 9.5 percent.
Domestic Debt
The total domestic debt consists of short term treasury bills, long term government bonds, and loans. The share of treasury bills is 61 percent, while bonds contribute 37 percent. The treasury bills have maturities between 30 days and 364 days. The estimated total domestic debt by the end of 2021 is MVR46.7 billion. It is estimated to be further increased to MVR50.2 billion by the end of 2022.
The recent decision to securitize the outstanding amount in the Public Bank Account as of end 2021 into 50-year bonds, will add further to the total domestic debt stock of the government.
Debt Service
The total debt service will reach an unprecedented 36 percent of revenue and grants in 2021, when it reaches a total of MVR7.1 billion (9.6 percent of GDP) by the end of the year. The amount to be spent on debt repayment and interest payments is expected to remain high at MVR5.7 billion even in 2022, at 24 percent of revenue and grants.
2022 and beyond
Total debt excluding guaranteed debt, will be at MVR91.3 billion at the of 2022, and reach MVR98 billion by the end of 2023. It is estimated to remain at over 100 percent of GDP in 2022 and beyond.
Maldives will spend USD250 million as external debt repayments and interest payments in 2022, and MVR1.9 billion on domestic debt repayments and interest payments. Almost 24 percent of total revenue (MVR5.8 billion) will be spent on debt service. This is expected to increase further in 2023, when total debt service reaches MVR8.2 billion , or 30 percent of total revenue. This means that for every MVR100 received from revenue, MVR30 will be spent on debt repayments.
