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Majority of state budget's deficit supplemented by MMA: World Bank

World Bank highlighted the Maldives' current economic and fiscal situation and provided recommendations to alleviate the challenges at present.

Ameera Osmanagic
21 May 2024, MVT 06:10
Economic Erdem Atas with other key figures of the World Bank -- Photo: Nishan Ali | Photo: Mihaaru
Ameera Osmanagic
21 May 2024, MVT 06:10

A large portion of the state's budget deficit last year was supplemented by central bank Maldives Monetary Authority (MMA), while 30 percent of the banking sector is being used for government's needs, said World Bank.

Opening the World Bank's Maldives Development Update: Scaling Back and Rebuilding Buffers (May 2024) presentation today, Country Economist and Resident Coordinator for Maldives at the World Bank Erdem Atas said that the government heavily relies on MMA and other commercial banks to secure financing, and that 60 percent of MMA's assets were invested as government's security as of January 2024.

However, efforts have been put in to stabilise this investment since November 2023, he said. Atas also added that 30 percent of the entire banking industry of the country is used on the government's Treasury Bills (T Bills) and Treasury Bonds (T Bonds).

While this poses challenges to the economic development of the country, Maldives' banking system has advanced by nine percent, he highlighted.

The Maldivian government, until the end of 2023, printed money worth upto MVR 4.4 billion (USD 285.3 million) from the Public Bank Account (PBA).

In light of the current situation, World Bank strongly urged Maldives to cut costs and implement fiscal reform as soon as possible to improve the fiscal situation of the country.

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