IMF calls for acceleration of Maldives fiscal reforms
IMF stated that the implementation of necessary economic reforms had been delayed.
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The International Monetary Fund (IMF) on Wednesday urged the Maldives to expedite measures to reduce government spending and improve its fiscal position.
The parliamentary finance committee and the economic committee held discussions Wednesday with an IMF delegation, during which IMF Mission Chief Piyaporn Sodsriwiboon highlighted key economic developments and challenges.
Piyaporn stated that the Maldives' tourism sector experienced growth last year, with further expansion expected in the coming year. He noted that the increase in tourist arrivals and revenue is a significant driver of economic growth. The opening of the new terminal at Velana International Airport is also expected to boost the sector, and he emphasised the need to remove obstacles to maximise benefits.
Addressing fiscal challenges, Piyaporn stated that the implementation of necessary economic reforms had been delayed.
"Fiscal and external vulnerabilities have increased over the past year. With that, it has been too late to make the necessary policy changes," she said.
She identified large-scale infrastructure projects and extensive social assistance programmes as key factors contributing to the country's fiscal deficit and debt burden.
"By the end of 2024, the country’s debt exceeded 120% of GDP," she noted.
"This cannot be solved without speeding up the necessary changes in policies. It is already too late. There will be more challenges," she added.
Piyaporn emphasised the need to reduce the current account deficit, address external financing constraints, and implement fiscal reforms without delay.
Piyaporn acknowledged the steps taken under the fiscal reform agenda, including:
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The 2023 revision of Goods and Services Tax (GST)
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The government's decision to halt money printing
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Amendments to the Public Expenditure Accountability Act and the Finance Act
She urged the government to accelerate the implementation of measures outlined in the 2025 budget to address economic imbalances and improve debt sustainability.
Piyaporn also called for the restructuring of the subsidy system to ensure that only those in need receive benefits. She suggested that some development projects could be postponed, allowing priority to be given to essential initiatives.
She further stated that fiscal and monetary policies should be strengthened to support economic growth and private sector expansion.
The government has estimated that cost-cutting measures will save MVR 6.6 billion this year.
Delivering the presidential statement at the opening of parliament on Thursday, President Mohamed Muizzu stated his intention to end the practice of government expenditure exceeding revenue.
"The aim is to reduce the budget deficit to MVR 9.4 billion this year by increasing revenue and reducing expenditure. Previously, the budget deficit stood at MVR 13.6 billion in 2024 and MVR 10.7 billion in 2023," the president said.
