President: No plans of taking more loans to finance projects

President Ibrahim Mohamed Solih speaks to press on June 8, 2022. (Photo/President's Office)

President Ibrahim Mohamed Solih said Wednesday his administration had no plans of taking more loans to finance projects.

In a press conference on Wednesday evening, President Solih said everyone must accept the challenges facing the global economy would also affect the Maldivian economy.

However, the current speculation regarding the Maldivian economic situation is false and is creating concern and fear within the community, he said.

He said that such speculation from certain individuals was politically motivated.

“This is not something that should be done to fulfil a political objective. We must be more serious, and work together to overcome the challenges before us,” he said.

President Solih said that the COVID-19 pandemic halted the economy in 2020, resulting in a loss of approximately MVR 70 billion in GDP, and loss of MVR 35 million in income to the state.

He said that the government did not have enough funds in the state reserves to run the economy and provide essential services back then, forcing the government to take loans.

“We were forced to take loans. And we did that. And that had been the advice of economic and financial institutions at the time,” he said.

President Solih said that the loans were used to support businesses and provide income support allowance, and to take successful measures to overcome the pandemic.

He said that the Maldivian economy now faced the Russia-Ukraine war, which has resulted in hikes in global prices, including prices of fuel, staples and cement. He said that the price of fuel had risen from USD 69 per barrel in 2021 to nearly USD 120.

President Solih said his administration was keeping a close eye on the global economic situation, and was taking all measures necessary.

“For one thing, we are going to ensure the state’s recurrent expenditure is covered by our income. That’s the path we are on even now,” he said.

President Solih said the government successfully reduced recurrent expenditure last May, bringing total expenditure to below projected levels. He said that though it was initially projected that expenditure would rise to MVR 15.1 billion by the end of May, the actual expenditure was reduced to MVR 14.1 billion.

He said the government would implement additional measures to bring down expenditure.

“We have halted some new projects. We will reveal the details. We have no plans of taking loans and signing for any new major projects. We will conduct the projects with the loans we have already taken,” he said.

President Solih’s remarks comes after Parliament Speaker, former President Mohamed Nasheed Nasheed suggested last week that the government should slow down projects in light of the economic situation.