Auditor General warns against delays in debt reduction measures

Auditor General Hussain Niyazy has said that the implementation of policies aimed at reducing public debt is being continually delayed and has now become, in his words, “a devil’s marriage.”

Speaking at a meeting of the Parliamentary Budget Committee reviewing the 2026 State Budget, Niyazy said expenditure control measures have not been implemented at a sustainable level, leading to an annual increase in national debt.

“The debt is increasing year after year because we have not reduced expenditure. The policies to reduce debt are not at a sustainable level,” he said.

He added that while the government’s budget book for next year does not include specific measures to reduce debt, such omissions reflect the continued postponement of fiscal reform. “As a rule, it is good not to include something that is not done. But how far can we postpone it? If we cannot reduce expenditure, the debt will reach an unsustainable level,” Niyazy said.

The Auditor General urged Parliament to approve the budget only after incorporating measures to reduce expenditure. “Otherwise, this could go beyond our reach,” he warned, adding that the government should implement recommendations made during budget discussions to ensure long-term debt sustainability.

He cautioned that continued delays in fiscal adjustment could leave the country vulnerable to external debt pressures. “At some point, the borrowers will come to meet it. What we have to do is prepare in advance,” he said.

Referring to the USD 600 million sukuk payment due next year, Niyazy said it remains a key fiscal challenge. However, he noted that after reviewing Ministry of Finance records and correspondence, his office believes there is a realistic plan to manage the repayment through refinancing.

“We are barely managing these obligations. But if preparations are made early, the situation can improve,” he said, warning that the adoption of unsuitable policies from other countries could worsen fiscal conditions.

Niyazy also noted that valuable land in Hulhumalé had been distributed free of charge despite the government’s pending USD 600 million debt obligation. “What should be the priority of a country—paying off debts or giving free goods?” he asked.