Maldives to sell first eco bonds to finance MVR 8.4 billion deficit

Government on Monday announced plans to sell 'blue bonds' and 'green bonds' to raise funds to plug the deficit in the budget proposed for next year, making it the first green or blue bond to be sold by the country.

Finance minister Ibrahim Ameer presented a budget of MVR 42.68 billion for the next fiscal year. It has a deficit budget of MVR 8.4 billion.

The government plans to finance the deficit through external sources: 

The government also plans to finance the deficit through internal sources: 

According to the budget proposal, the government aims to fund environment-related projects by selling green or blue bonds worth MVR 771 million in the foreign market over the next three years. According to the government, the process of developing a 'sovereign sustainable financing framework' for issuing these bonds is in its final stages.

A blue bond is a relatively new form of a sustainability bond, which is a debt instrument that is issued to support investments in healthy oceans and blue economies. Like in the case of conventional bonds, investors lend money to a bond issuer, who agrees to repay the interest every year for the term of the bond plus the capital on a certain day. In a blue bond, earnings are generated from the investments in sustainable blue economy projects. 

A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.​

The first bond to be sold by the Maldives was the $200 Sunny Side Bond issued in 2017. In 2018, a $100 million Euro Bond was also sold.