IMF maintains positive outlook on Maldives despite economic pressures

The International Monetary Fund (IMF) has said the Maldivian economy continues to demonstrate resilience despite the impact of developments in the Middle East on tourism and economic activity.

The assessment was made following an IMF mission to the Maldives from 4 to 14 June as part of its annual review of the country's economy.

In a statement issued at the conclusion of the visit, IMF Mission Chief Piyaporn Sodsriwiboon said the Maldivian economy had remained resilient over the past year despite facing a challenging external environment.

The IMF noted that tourism growth has been affected by the wider economic impact of the conflict in the Middle East, while higher global oil prices have added pressure to the economy.

As a result, economic growth is projected to slow to around 1 per cent this year.

However, the IMF expects economic activity to recover from next year, with medium-term growth projected to stabilise at around 4 per cent.

The organisation also highlighted concerns relating to public debt and external financing requirements. Despite these challenges, it noted that the government has continued to meet its debt obligations, including repayments on sovereign sukuk and other external borrowings.

According to the IMF, this has helped strengthen confidence among international financial institutions and investors.

The statement further noted the impact of fiscal measures introduced by the government in 2025. It cited foreign exchange regulations as a factor supporting reserve accumulation and acknowledged steps taken by the Maldives Monetary Authority to resume open market operations aimed at supporting monetary stability.

While recognising progress in several areas, the IMF said fiscal and debt-related risks remain elevated.

The organisation stressed the importance of continuing fiscal reforms to reduce budgetary pressures and strengthen public finances.

Among its key recommendations was a review of the subsidy system, with a shift towards targeted assistance for lower-income groups rather than broad-based subsidies.

The IMF also called for reforms to state-owned enterprises, including closer monitoring and restructuring measures to reduce their fiscal impact.

In addition, it encouraged increased investment in renewable energy to reduce exposure to fluctuations in global fuel prices.

The IMF said maintaining policy reforms and fiscal discipline would be important in supporting economic stability and strengthening the country's medium-term outlook.