IMF Urges Maldives to Expedite Fiscal Reforms Amid Growing Economic Concerns

The International Monetary Fund (IMF) has once again urged the Maldivian government to accelerate proposed fiscal reforms, warning that further delays would exacerbate the country’s financial challenges.

An IMF delegation currently in the Maldives to assess the economic and fiscal situation shared its findings during a meeting of Parliament’s Joint Committee on Public Accounts and Economic Affairs.

advertisement

advertisement

advertisement

advertisement

During the session, Head of Delegation Piyaporn Nikki Sodsriwiboon noted the continued growth of the tourism sector, highlighting achievements from the previous year. She expressed optimism about further progress, particularly with the new terminal at Velana International Airport, and stated that this growth would have a positive impact on the economy.

However, Sodsriwiboon stressed that the implementation of fiscal reforms was already overdue. She cautioned that any further delays would lead to an increased debt deficit, placing further strain on the country’s financial stability.

The government has currently halted major infrastructure projects, a decision that was praised by the IMF delegation. Delegation members advised that priority should be given to projects essential for improving the economic and financial situation. They stated that infrastructure projects should only be undertaken if they provide clear benefits to the nation, taking into account the overall fiscal position.

The delegation also raised concerns over the need for reforms in the subsidy system. Sodsriwiboon urged the government to implement these reforms as soon as possible. She also commended the ongoing amendments to laws related to the resort industry and praised the current administration’s policy of halting the printing of new banknotes.

According to Sodsriwiboon, the most pressing issue is for the Maldives to acknowledge its current financial difficulties and develop a comprehensive strategy to address them. She noted that the situation could be improved if the proposed plans were effectively implemented.

Last year, two international credit rating agencies downgraded the Maldives’ credit rating. Moody’s lowered its rating to Caa2, indicating a high credit risk, while Fitch assigned a ‘CC’ rating, citing concerns over declining foreign currency reserves. The World Bank and the IMF have repeatedly urged the Maldives to implement cost-cutting measures to address these risks.

The Maldivian Parliament has passed a state budget of MVR 56.6 billion for 2025, which includes MVR 11.5 billion allocated for fiscal reform initiatives.