Thursday 11th Aug 2022
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Economy

Motion for Parliament to review state debt

A motion has been put forth to Parliament that compels the Parliament to review any debts taken by the state.
The amendment was filed by Mahibadhoo Constituency Member of Parliament Ahmed Thoriq.
In his motion, MP Thoriq said that whenever the government wished to take a loan and/or give sovereign guarantee to any party then an in-depth studies must be taken to determine the repercussions on the economy and state budgets if a loan is taken and/or the state gives a sovereign guarantee to any party.
Then, the Minister needs to present this report to the President, for submission to the Parliament. The Parliament then would need to gain majority votes for the motion if the government is to take out the said loan or sovereign guarantee is to be granted.
MP Thoriq’s amendment also stated that the report must include the principal amount of the loan or guarantee, the interest amount, administrative costs associated with taking the loan or giving the guarantee, time period to pay off the loan, and all relevant documents required for this process. Additionally, the amendment also mandates that if the government seeks out a loan, then the advice of Central Bank Governor must be sought out.
Presently, there is no check on how much debt the state can take on. The Minister advises the President based on internal research, and the President goes ahead with taking the debt.
Any details of debt is shared to the Parliament within 90 days after the debt is taken.
Speaking to TMJ, MP Thoriq said that as there was no Parliament check on how much debt is taken, there was rampant abuse of it. As such, he highlighted that there was a pattern of administrations taking heavy loans near the end of their current terms and burdening the state with that responsibility.
“There is more room to abuse now. This amendment is an attempt to balance this, by inserting the Parliament into the process,” he said.
This, he said, was an attempt to ensure that whatever debt was taken would be mainly used to fund infrastructure projects and projects that would earn the country money.