President Nasheed Warns on Imminent Sovereign Debt Crisis

President Mohamed Nasheed reiterates his calls on the Government of Maldives to reverse its decision to annul the contract awarded to GMR Infrastructure consortium to develop and manage the Male’ International Airport in 2010.

Following the arbitration before the Singapore Court of Appeal, GMR has said they will not change its compensation claim of $1.4 billion over the unlawful termination of the contract by the Government of Maldives in 2012.

The consequences of the outcome of the arbitration will drive the Maldivian economy to the brink leading to major sovereign debt crisis. Estimated GDP for 2014 is USD 2.5 billion with an estimated USD 868 million of external debt while the Maldives receives less than USD 30 million in grant aid. Coupled by the budget deficit and domestic debt crisis, we are looking at a heavy burden on our children and grandchildren. It would mean by the end of 2014, debt will increase from 25% of GDP to 88% of GDP. (MMA Monthly Statistics)

Commenting on the Government’s handling of the GMR case, President Nasheed said:

“the Maldives is now known around the world as a country that doesn’t keep its promises or honour the contracts. The airport fiasco will hit each and every Maldivian because banks won’t lend money and companies won’t invest in our country without demanding much higher rates of interest.”

“By now, Maldivians should have been looking forward to a world-class, new airport, to rival Kuala Lumpur,Singapore, and Hong Kong. Instead we have nothing but an abandoned building site. The actions of President Yameen and Waheed have caused this crisis and Maldivians will be paying for their recklessness for decades to come” he added.

International best practices were followed during the IFC overseen airport concession process under PPP and the Anti-Corruption Commission of the Maldives ruled out corruption in the GMR agreement.

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