Malé: The Maldives is on the verge of bankruptcy as its financial condition remains unstable. The economic situation deteriorated further after President Mohamed Muizzu took office and strengthened ties with China. The International Monetary Fund (IMF) has also warned that the financial situation of the Maldives is likely to deteriorate further in the coming days.
According to the reports, the Maldives has taken a significant amount of debt from China, but it does not have sufficient foreign exchange reserves to repay it. Additionally, the country has not yet fully recovered from the economic downturn caused by the COVID-19 pandemic.
Maldives’ Economy at Risk
An IMF mission, led by Piyaporn Sodsriwiboon, visited Malé from February 3 to February 25 as part of the 2025 Article IV consultation to discuss recent economic developments, outlook, and the country’s policy priorities. In a statement at the end of the mission, Sodsriwiboon said, “There is significant uncertainty around the forecasts, and the risks are tilted to the downside.”
What will be the GDP growth rate of the Maldives?
According to the IMF projection, the real GDP growth rate of the Maldives is at 5 percent for this year. It is important to note that the opening of the new airport terminal is expected to help stabilize the economy in the medium term. Inflation is expected to rise by 2.3% this year. “External vulnerabilities persist amid consistently large current account deficits and pressure on foreign exchange reserves.”
Fiscal Deficit and Public Debt Remain a Concern
The overall fiscal deficit and high levels of public debt are expected to persist, necessitating immediate policy adjustments. According to the statement, the Maldives is at a critical juncture in maintaining macroeconomic and debt stability. It further stated, “The swift implementation of expenditure reform measures outlined in the 2025 budget will be crucial to systematically reducing imbalances and restoring economic stability.”
During its visit to the Maldives, the IMF mission met with Finance Minister Moosa Zameer, Maldives Monetary Authority (MMA) Governor Ahmed Munawwar, members of parliament, and private businesses.
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