Maldives at ‘high risk’ of external, overall debt distress, says IMF

Feb 8, 2024

Male: growing Fiscal deficit and public debt, the Maldives remains at “high risk” externally and overall debt crisisThe International Monetary Fund (IMF) said in its report.
An IMF mission led by Piyaporn Sodsriwiboon visited Male from 23 January to 6 February to discuss recent economic developments and the country's policy priorities.
The Maldives economy is projected to grow by 13.9 percent in 2022 and 4.4 percent in 2023, the report said.
“After the pandemic-induced contraction, the Maldivian economy is projected to grow 13.9 percent in 2022 and 4.4 percent in 2023. Tourist arrivals are expected to increase further, with growth projected to be 5.2 percent in 2024.” The report said.
The global financial agency further said that, amid higher fuel prices and strong import demands, the current account deficit is projected to remain 'large' in 2024.
“Without significant policy changes, the overall fiscal deficit and public debt are projected to remain high, and the Maldives remains at high risk of external and overall debt distress. Amid elevated fuel prices coupled with continued strong import demands, in 2024 The current account deficit will decline gradually in the medium term but is expected to remain large.
The report said the Maldives is highly vulnerable to climate change risks, with flooding and rising sea levels potentially leading to severe economic costs.
According to the IMF, continued fiscal consolidation with tight monetary and macro-prudential policies is needed to reduce vulnerabilities and restore the sustainability of public finances and debt.
According to the report, the Maldives is also “highly vulnerable” to climate change risks, with flooding and rising sea levels potentially leading to severe economic costs.
The global financial agency suggests strengthening institutions to support climate adaptation and mitigation efforts that can help enable access to additional climate financing and meet climate pledges.
Earlier on Monday, Maldivian President Mohammed Muizzu addressed Parliament in a session completely boycotted by the opposition.
Muizzu underlined “the need for the Maldives to strengthen its military capabilities in the terrestrial, aerial and maritime domains as part of a comprehensive defense strategy.”
The President also said that “The Government of the Maldives has officially informed that it will not renew the agreement enabling foreign countries to measure and map the oceans and coastlines of the Maldives.”
Muizzu also said that diplomatic talks are going on for the withdrawal of Indian troops. He elaborated that, as agreed in previous talks, military personnel on one of the three aviation platforms will be withdrawn before March 10, 2024, and military personnel on the remaining two platforms will be withdrawn before May 10, 2024. Will be taken.
It is noteworthy that removal of Indian troops from Maldives was the main campaign of Muizzu's party. Currently, around 70 Indian troops are deployed in Maldives along with Dornier 228 maritime patrol aircraft and two HAL Dhruv helicopters.
The second meeting of the high-level core group between Maldives and India was held in New Delhi last week. The third meeting is expected to take place later this month.

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