MALE: An Indian bank has issued $300 million worth of loan facilities to the Maldivian government, said Ahmed Inaz, deputy minister at the ministry of economic development.

The agreement was reached earlier this year with assistance from the Indian government; members of the Export Import (Exim) Bank of India visited the Maldives in the past two days, planning details of how to channel the loan, said Inaz.

In response to whether this will function like a stimulus package, Inaz said,

"You can call it that. This is to fulfil our…key pledges of housing affordability. We are targeting that. We believe that once that happens, it will eventually address the dollar shortage as well."

The Exim bank was launched by the Indian government and is the country’s leading export finance institution, with its main objective being to provide economic assistance to foreign governments to finance imports of goods and services from India.

Most of the loan will be used by the private sector with government backing, said Inaz.

“We want to keep [the loan] outside the budget,” said Mohamed Zuhair, the president's office press secretary. “We don’t want to constrain the budget more.”

The agreement was reached at a similar time as a US$100 million loan from the Indian government, half of which is to be used to import Indian goods. Inaz said the agreement was made to ease the US dollar shortage crisis in the Maldives.

PPP Programme

Half the loan from the Exim bank will go towards government planned infrastructure, open for bid from the private sector, said Inaz.

Zuhair said the loans will fall under the Public-Private Partnership programme (PPP) for projects such as sewage management, and road and harbour development.

Private companies will make proposals to the Exim bank, which the Maldivian government planning commission will certify as bona fide schemes to provide public infrastructure.

The agreement stipulates the money be used to buy Indian goods and contractors.

Another US$100 million of the loan will go towards resort construction, said Inaz, adding that resorts will have to get government backing to submit proposals to the bank.

Out of the entire loan, US$50 million will be included in the government budget, allocated towards consumables especially in the health and education sector, said Inaz.

Speaking to Minivan news today, Education Minister Mustafa Lutfi said that that the loan “will be in fact very useful. It will be useful in training teachers on IT enabled learning.”

He added that they plan to extend this professional development to the atolls as well.

In response to whether there are concerns over the size of the loan, Inaz said, “Not at the moment. We need this kind of funding…for the economy to take off.”