Maldives' concessional loans unavailable, Audit Office says

The Auditor General’s Office said on Thursday that foreign budget support may not be available next year due to the Maldives’ unsustainable debt levels and downgraded credit ratings.

In a presentation at the parliamentary budget review committee addressing revenue, expenditure, and financing elements of the proposed budget, the Auditor General’s Office highlighted that the budget includes MVR 6.6 billion in external financing aimed at countering the fiscal deficit. However, this funding remains unsecured.

“The budget documentation indicates that the MVR 6.6 billion is not yet secured,” the Auditor General’s Office reported. “Current borrowing practices have impacted fiscal and debt sustainability and have led to a downgrade in the state’s sovereign credit rating, which may limit access to substantial foreign financing on concessional terms.”

The government has proposed a budget of MVR 56.6 billion for the upcoming year, estimating MVR 39.8 billion in grants and revenue against MVR 51 billion in expenditures, resulting in a projected deficit of MVR 9.4 billion. The budget also forecasts economic growth at 6.4 percent for next year.

The Auditor General’s Office further underscored the urgency of implementing cost-reduction measures, noting the increasing expenditure pressures.

“The rise in government expenditures calls for immediate action to reduce or control expenses, especially given the current challenges to fiscal and debt sustainability,” the Auditor General’s Office noted.

Additional recommendations included:

The Auditor General’s Office cautioned that without effective cost-cutting measures, the government could face significant challenges in executing the proposed budget.