Government will sponsor loans even for local councils

The laws that allow the government to act as a guarantor have been amended so that local councils can list the government as a guarantor.

 In an article that was published in the Gazette, the Finance Ministry specified the parties that can list the government as a guarantor. These include companies that the government has shares in, subsidiaries of previously mentioned companies, and companies that have registered or reregistered to do business in the Maldives.

As per the rectification brought to this rule, local councils and independent branches of the government can also act as guarantors.

After the rectification people can apply for this as long as it fits the rules and regulations set by the government, which are if one wants to pursue the development of tourism or a social housing project.

In addition to these, if the government deems a project important for the development and financial transactions sanctioned by the Finance Ministry. Even citizens can apply for the government to guarantor them, the Finance Ministry said.

This rectification states that it can only be approved if the effective interest rate is below 3.5 percent after deducting the variable interest.

But this condition is void if a document from the Minister states that after looking at the economic state of the country, the market at the time of taking out the loan, the purpose of the loan, and the importance of taking out a loan the Minister has approved it.

The Guarantee Application Form should be handed to the Ministry.