Maldives at high risk of debt distress: IMF

Despite post-pandemic solid growth, the International Monetary Fund (IMF) has warned that the Maldives remain at high debt distress risk.

“Without significant policy changes, the overall fiscal deficits and public debt are projected to stay elevated, and the Maldives remains at high risk of external and overall debt distress,” the IMF said, calling for “urgent policy adjustment.”

The assessment echoed the World Bank’s earlier assessment of the fiscal strain facing the Indian Ocean archipelago.

Acknowledging the challenge, President Mohamed Muizzu recently told parliament that his government would adopt a reform policy to improve the country’s finances and bring debt and fiscal conditions to sustainable standards.

IMF staff issued the statement as part of their “preliminary findings” from their mission to the Maldives.

As tourist arrivals are expected to rise further, the island nation’s economy is projected to grow at 5.2% in 2024, the IMF said.

Further, it said that the expansion of the Velana airport terminal and likely increase in hotel accommodation capacities is projected to boost growth potential.