Sukuk to be refinanced through planned repayment strategy: Zameer

Finance Minister Moosa Zameer said Thursday that the USD 500 million sukuk due in April will be refinanced at low interest rates based on a structured repayment plan, unlike what he described as the approach taken by the previous government.

Speaking following President Dr Mohamed Muizzu’s presidential address to Parliament, Zameer said the current administration will ensure the refinancing interest rate does not exceed nine percent.

In his address earlier in the day, President Muizzu said the refinancing of the sukuk would be carried out responsibly and without placing an undue burden on state finances.

Zameer criticized the previous MDP administration, stating that it had issued USD 500 million in securities at interest rates higher than prevailing market rates to repay USD 250 million borrowed for the construction of Dharumavantha Hospital.

“When that debt was taken, there was no consideration at all for how it would be repaid,” Zameer said.

He said the Sovereign Development Fund (SDF) and usable foreign currency reserves currently have sufficient capacity to repay the sukuk if required.

As highlighted by President Muizzu in his address, Zameer said the SDF currently holds USD 275 million, while usable reserves stand at USD 600 million.

“Even if we had to repay the sukuk today, we have the capacity to do so,” he said.

Zameer also noted that repayments of loans taken from China had been postponed to improve the country’s fiscal position and ease debt repayment pressures. He added that the Indian currency swap facility currently included in reserves has been rolled over.

Last year, the government also postponed the repayment of a USD 100 million bond issued by the Abu Dhabi Fund for Development in 2018 by a further five years.

According to Zameer, these measures have helped improve liquidity to a level where the government can borrow the remaining USD 150 million needed to refinance the sukuk at a significantly lower interest rate.

“We will take on this debt based on revenue streams and with a clear repayment plan, unlike the previous government,” he said.

Zameer also said that the USD 400 million currency swap facility provided by India has not been used for government expenditure. He added that an additional USD 400 million swap facility offered by India remains untapped.