Debt restructuring will cut off foreign borrowing ability: Ameer
Ameer said debt restructuring will lead to rating agencies downgrading the sovereign credit rating to "selective default ratings".
Finance minister Ibrahim Ameer said on Tuesday that if the government restructures its debt, it will be difficult for the state and businesses to raise funds from abroad.
Ameer made the remarks in a written reply to a question raised by Maafannu Central MP Ibrahim Rasheed. Ibrahim Rasheed, who supports party President Mohamed Nasheed, one of the two factions within MDP, asked the minister questions about managing the state's debt.
Ameer said debt restructuring will lead to rating agencies downgrading the sovereign credit rating to "selective default ratings", which, he said, would result in the state and businesses finding it difficult to raise funds from abroad.
"Therefore, the best way to put the state's debt on the same path is by reducing public expenditure and increasing revenue," he said.
According to the statistics shared by the minister in his reply:
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In 2021, the direct borrowing and guaranteed debt of the state was 118% of GDP
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Of these, the percentage of direct borrowing from the state is 100%; the percentage of guaranteed debt is 18%
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At the end of 2022, debt as a percentage of GDP was estimated at 111%
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Of these, the percentage of direct borrowing from the state is 98%; the percentage of guaranteed debt is 13%
Nasheed, who is also the speaker of parliament, has spoken about debt restructuring on several occasions. However, Ameer has said in the past that there is no such situation in the country where debt restructuring is required.
