The recent International Monetary Fund (IMF) mission visit to the Maldives has culminated with a warning issued on the country’s economic stability.
During their stay from January 23, to February 6, 2024, the IMF mission discussed the Maldivian economic outlook and policy priorities in the context of the 2024 Article IV consultation; held earlier.
As per Piyaporn Sodsriwiboon, who led the IMF mission to the Maldives, the country is at high risk of fiscal deficits and public debt levels without significant policy changes. She also emphasized the need for immediate policy adjustments to cull these challenges.
While noting the Maldivian economy’s rebound in 2022 with a 13.9% growth after the pandemic-induced contraction, IMF noted this growth is expected to moderate at 4.4% in 2023 which would increase moderately to 5.2% in 2024.
The expansion of the Velana International Airport (VIA) project is aimed at boosting economic growth; though nothing is as per the mission, set in stone yet.
Sodsriwiboon also highlighted the vulnerable nature of the Maldives to climate change risk, including floods and rising sea levels.
IMF emphasized the importance of fiscal consolidation through expenditure rationalization and domestic revenue mobilization. The mission called for a reform in state-owned enterprises (SOEs) to reduce fiscal burdens and strengthen them.