Govt debt approach at odds with policy, audit report finds

A report by the Auditor General’s Office Maldives has found that government actions are not aligned with targets set under the Medium-Term Debt Strategy (MTDS).

The framework, covering the period 2025–2027, was submitted to the People’s Majlis on 31 July 2024. It sets out guidelines for managing sovereign debt with a focus on cost and risk.

According to the report, practices during budget preparation and implementation have not followed the parameters defined in the MTDS.

“Challenges have arisen in implementing the Medium-Term Debt Strategy policies,” the report stated.

The audit also found that financing requirements have exceeded targets set under the Medium-Term Fiscal Strategy (MTFS).

As a result, the government has relied on debt financing outside the original plan, leading to outcomes that differ from projections and approved budgets.

The report noted that the divergence increased in 2025 following revisions to fiscal plans without corresponding changes to debt policies.

It also stated that some cost-reduction measures were delayed after the budget was passed, contributing to the gap between policy and implementation.

“Financial decisions are being made based on short-term liquidity requirements rather than medium-term policy objectives,” the report said.

The Auditor General recommended closer integration of fiscal planning and debt management processes.

Other recommendations included ensuring adherence to existing policies, maintaining parliamentary oversight, limiting borrowing within MTFS and MTDS thresholds, and improving governance of state-owned enterprises to reduce reliance on government support.