The International Monetary Fund (IMF) has called on the Maldives to take immediate action to reduce government spending, warning that delays could worsen the country’s fiscal situation.
The IMF issued the recommendation during a meeting with the Finance and Economic Committees of Parliament today.
According to the IMF delegation, the Maldives' tourism industry is showing growth, benefiting the broader economy. They noted that the reopening of airports has positively impacted economic recovery.
The IMF also forecasted a five percent economic growth for the Maldives this year but cautioned that rising debt and expenditures pose significant risks.
If strong measures are not accelerated, the debt and fiscal deficit will grow in the coming years. There is very little time to do this, the IMF delegation stated.
The delegation urged the government to introduce necessary policy changes and speed up the implementation of financial reforms. They also emphasized the need to revise the existing subsidy system to prioritize those most in need and called for the acceleration of state-owned enterprise (SOE) reforms and the restructuring of Aasandha.
Additionally, they highlighted challenges in securing necessary funds for structural development projects.
The IMF acknowledged that halting money printing and implementing an active monetary policy through the central bank were positive steps. However, they warned that increased investment in state securities could be risky. They also noted that financial law amendments made last year were beneficial.
The delegation further stated that the $400 million currency swap facility provided by India late last year would offer some relief to the Maldives' fiscal and debt management situation.
The IMF issued the recommendation during a meeting with the Finance and Economic Committees of Parliament today.
According to the IMF delegation, the Maldives' tourism industry is showing growth, benefiting the broader economy. They noted that the reopening of airports has positively impacted economic recovery.
The IMF also forecasted a five percent economic growth for the Maldives this year but cautioned that rising debt and expenditures pose significant risks.
If strong measures are not accelerated, the debt and fiscal deficit will grow in the coming years. There is very little time to do this, the IMF delegation stated.
The delegation urged the government to introduce necessary policy changes and speed up the implementation of financial reforms. They also emphasized the need to revise the existing subsidy system to prioritize those most in need and called for the acceleration of state-owned enterprise (SOE) reforms and the restructuring of Aasandha.
Additionally, they highlighted challenges in securing necessary funds for structural development projects.
The IMF acknowledged that halting money printing and implementing an active monetary policy through the central bank were positive steps. However, they warned that increased investment in state securities could be risky. They also noted that financial law amendments made last year were beneficial.
The delegation further stated that the $400 million currency swap facility provided by India late last year would offer some relief to the Maldives' fiscal and debt management situation.
