Sunday 21st Apr 2024
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State guaranteed Loans

USD 226 Million Indian Loan Has High Interest Rate

The USD$226 million loan granted by India’s EXIM bank to the Fahi Dhirulhun Corporation (FDC) has been confirmed to come with a high-interest rate. The loan was taken to fund 4,000 housing units planned for development in Hulhumalé by the Solih administration.
The details on the loan had been made public by the Public Accounts Committee of the parliament today. The development project had been planned to be undertaken by two companies. 2,000 housing units were planned to be developed by India’s NBCC, which would cost USD$110 million. The remaining 2,000 units would be developed by India’s JMC Projects at the cost of USD$ 116 million.

Details on the NBCC loan:

  • Total sum loaned: USD$ 110 million
  • Grace period: 2.5 years
  • Maturity period: 15 years
  • Interest rate: 3.25% interest + LIBOR
  • Sum to be repaid, with interest payments and fees: USD$ 153 million
  • Loan repayment year: 2036

Details on the JMC Project loan:

  • Total sum loaned: USD$ 116.5 million
  • Grace period: 3.5 years
  • Maturity period: 15 years
  • Interest rate: 3.5% interest + LIBOR
  • Sum to be repaid, with interest payments and fees: USD$ 162.1 million
  • Loan repayment year: 2036
The loan agreement had been signed on 21 September 2021, with a sovereign guarantee from the government. To date, the government had maintained that both loans had been “a concessional loan” granted at “low-interest rates”.

These loans are relatively similar to the loans taken out by the Yameen administration to fund the Hiyaa project.

The Yameen administration had taken out USD$434 million at 3.3% interest, plus LIBOR, and had been a commercial loan taken out from China’s ICBC.

Speaking at the session of the Public Accounts Committee, MP Ibrahim Shareef (Maradhoo) had commented on the high-interest rate on the “concessional loans”.

“3.5% plus LIBOR is slightly high for a concessional loan”, he said.