Muizzu's Flip Flop Over International Debt Advisor

Date

10/23/2024 4:49:15 AM

(MENAFN- NewsIn Asia) By Ibrahim H. Shihab/Maldives Republic

Male, October 23: The Mohamed Muizzu administration, in yet another reversal, has cancelled its contract with US independent investment banking firm Centerview Partners, local media sources say.

Centerview, before the cancellation, had been appointed as debt advisors to the administration at a monthly retainer of US$55,000-close to MVR 845,000-it has been reported by local media sources. While Centerview's appointment had not been publicly announced, Reuters, citing two reliable sources, had confirmed the selection earlier this month - the reason for the abrupt termination has similarly not been made public.

The Maldives' public and publicly guaranteed debt stood at US$8.2 billion in the first quarter of the year-118 percent of the nation's GDP-with debt mostly owed to India and China.

“The administration has decided to take various measures to reduce recurrent expenditure, including reducing the number of political posts and reducing expenditure on, or eliminating altogether, expenses towards commemorating various occasions,” President Muizzu had said in June.

However, the situation continued to deteriorate as the implementation of fiscal reforms were consistently delayed. With the nation's usable foreign reserves completely exhausted in August, credit rating agencies Fitch and Moody's subsequently downgraded the nation's rating to indicate that it might be at imminent risk of defaulting on sovereign debts.

The administration was given a lifeline when the government of India rolled over a US$50 million payment owed in September 2024 to 2025. Since then, the Muizzu administration has also managed to come to an agreement, with the Reserve Bank of India (RBI), on currency swap lines of US$400 million and INR 30 billion (US$357 million) via the Maldives Monetary Authority (MMA). The currency swap lines, as agreed, will be valid until 18 June 2027.

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