The International Monetary Fund (IMF) has once again warned the Muizzu’s government to take urgent steps to fix the country’s economy. The IMF cautioned that delays in reforms could make the country’s financial problems worse, especially with rising debt and budget deficits.
The warning was issued during discussions with the Parliamentary Joint Committee of Public Accounts and Economic Affairs, where an IMF delegation shared its latest findings on the Maldives’ economic situation.
Key Issues Raised by the IMF
-
Slow Reforms Are Hurting the Economy: IMF Mission Chief Piyaporn Nikki Sodsriwiboon noted that while the Maldivian economy is expected to grow by 5% this year due to the tourism sector and the new terminal at Velana International Airport, financial problems remain serious.
-
Urgent Areas for Reform: The IMF stressed the need for changes in subsidies, state-owned enterprises (SOEs), and the public health insurance scheme, Aasandha.
-
High Debt Levels: Maldives’ debt has now exceeded 120% of GDP due to large-scale infrastructure projects and costly social programs.
-
Fiscal Deficit Warning: The country’s budget deficit is expected to be MVR 9.4 billion this year, requiring better management of capital spending.
Government’s Response and IMF’s Assessment
The IMF acknowledged that the government has taken some steps, including:
- Raising the Goods and Services Tax (GST) in 2023
- Amending financial laws
- Stopping money printing
- Introducing cost-cutting measures to save MVR 6.6 billion
President Mohamed Muizzu has also promised to cut unnecessary spending and boost government revenue. Major infrastructure projects have been put on hold, a decision that the IMF welcomed as a positive step toward economic stability.
IMF’s Final Warning
The IMF delegation praised the efforts to restructure subsidies, ensuring that only those in real need receive financial support. However, international credit agencies like Moody’s and Fitch have downgraded the Maldives’ credit rating, warning about low foreign currency reserves and ongoing financial troubles.
With the 2025 state budget set at MVR 56.6 billion, including MVR 11.5 billion in new fiscal reforms, the government is under pressure to act quickly. The IMF’s message is clear: delays are no longer an option, and immediate action is needed to prevent further financial decline.
