Former Economic Minister Fayyaz Ismail has today criticized the loan taken during former President Abdulla Yameen’s administration to build the new terminal at Velana International Airport (VIA), claiming it constitutes a large portion of the country’s foreign debt. Yameen had portrayed himself as a “great economist” when taking this loan.
In a post on X regarding the new terminal’s debt issue, Fayyaz stated that handing over the operation of Velana Airport to India’s GMR for development without any cost to the state, and then deciding to build the airport by taking on more debt, was an inconsistent decision made by Yameen for political purposes. He also said this was done by canceling the agreement in a way that was detrimental to the state.
The operation of Velana Airport was handed over to GMR for 25 years on June 28, 2010, during former President Mohamed Nasheed’s administration. This was the first MDP government, and it was also the main reason that led to the fall of Nasheed’s presidency on February 7, 2012.
When this agreement was terminated during former President Dr. Mohamed Waheed’s administration in 2012, Yameen’s government paid GMR $271 million (4.1 billion rufiyaa) as compensation on November 15, 2016. A post from Nasheed’s unofficial X account “Another Maldives” earlier this month criticized the new terminal project, stating that 15 years of airport development had been lost. The 15 years Nasheed referred to is believed to be in reference to the period GMR was contracted to operate the airport.
Fayyaz’s post stated that a large percentage of the Maldives’ foreign debt is shared by “the debt taken in the name of the airport” during Yameen’s administration. “This is the most reckless decision made by any Maldivian leader to date. As a result, the opportunity to find funds for other essential needs of the Maldivian people has also been closed,” Fayyaz said in his post, criticizing Yameen without mentioning his name.
He said that if the debt for the new terminal had not been taken in 2014 during Yameen’s administration, the number of tourists coming to the Maldives today would be at four million, and the GDP or per capita income would be doubled.
“Due to this decision made by a leader for political purposes, the economy has suffered a loss of $60 billion,” Fayyaz said. “The responsibility for this loss should be taken by the person who claimed to be a great economist and caused this loss to the Maldives. This is the economic thinking of ‘Frontonomics’.” Fayyaz has questioned whether such a huge loss should be celebrated as a success, stating that the new terminal project has caused hundreds of billions of dollars in losses to the Maldivian economy and the entire state. He also criticized the government for spending millions of dollars on a grand ceremony to open the terminal before its work is fully completed.
The state has to repay more than 15 billion rufiyaa in debt next year. While Fayyaz stated this, 50 percent of the debt the state has to repay next year is from the $500 million (7.7 billion rufiyaa) sukuk sold in 2021 during former President Ibrahim Mohamed Solih’s (Ibu) administration when Fayyaz was the Economic Minister. Part of that sukuk was used to pay for the “Sunny Side” bond taken by Yameen’s government in 2017. $200 million was paid for that bond. The remaining funds from the sukuk issued by Ibu’s government in 2021 were used to cover expenses as revenue decreased due to COVID-19.
Another large amount to be paid next year is the $100 million (1.5 billion rufiyaa) bond sold by Yameen’s government in early 2018. This bond was sold to the Abu Dhabi Fund for Development (ADFD). The bond was used to cover budget expenses for that year. During Ibu’s presidency in 2020, $743 million (11.5 billion rufiyaa) was borrowed through 18 loans. The largest projects being carried out through debt during Ibu’s administration are the Thilamale’ Bridge, the 4,000 flats built in Hulhumale’, and the Thilafushi Port Project. By the end of Ibu’s presidency, the total foreign debt of the Maldives had reached 50 billion rufiyaa.
At the end of Yameen’s presidency, the debt stood at 39.6 billion rufiyaa. The largest portion of this was spent on reclaiming Hulhumale’ Phase 2, building Hiyaa flats, and developing the new terminal at Velana International Airport. A significant amount was also spent on building Dharumavantha Hospital.
The government is now preparing to open the new terminal of VIA on the 26th of this month, coinciding with the 60th anniversary of the Maldives’ independence. The project, which began during Yameen’s administration in 2016, has been prolonged without completion.
To complete the work on this new terminal of the country’s main airport, since this government came to power, $100 million (1.5 billion rufiyaa) from the Saudi Fund and $80 million (1.2 billion rufiyaa) from the Abu Dhabi Fund for Development (ADFD) have been arranged. In total, approximately $600 million (9.2 billion rufiyaa) has been spent on this project.
