Guarantee for Heavy Load's MVR 2.3 million loan was unlawful: Auditor General

Auditor General Niyaz Ibrahim has said that in 2010, the government gave guarantee for a MVR 2.3 million loan given to Heavy Load by State Bank of India (SBI) under a credit facility extended by India, against the Public Finance Act.

A statement issued by Auditor General Niyaz Ibrahim on Wednesday states that the Ministry of Finance providing a letter of guarantee for a $206,400 loan given by State Bank of India (SBI) to Heady Load in 2010 under a $100 million credit facility extended to the government of the Maldives by the government of India in 2008, was a violation of the Public Finance Act.

The Auditor General said that the government can only act as a guarantor for a loan with the written approval of the President, but this document is lacking for the aforementioned transaction.

Article 5 (c) of the Public Finance Act states, “Money may be borrowed by the State and guarantees may be given by the Government only as maybe determined by the President in accordance with the Constitution, upon submission by the Minister having considered the effects and the consequences to the economy of the country and to public finances of such borrowing or giving of such guarantee.”

The Auditor General advised the government to act within the limits of the law when giving guarantee for loans in the future, and to reclaim the money owed by Heavy Load.