Following its 'Article IV' consultation mission, the IMF emphasized the need to accelerate economic reforms, warning that while the Maldives economy is projected to grow by five percent, fiscal imbalances continue to widen due to financial challenges.
The International Monetary Fund (IMF) has urged the Maldives to implement immediate policy changes to stabilize its debt and fiscal situation.
Following its 'Article IV' consultation mission, the IMF emphasized the need to accelerate economic reforms, warning that while the Maldives economy is projected to grow by five percent, fiscal imbalances continue to widen due to financial challenges.
IMF noted that tourism remains the primary driver of economic growth, with the new Velana International Airport terminal expected to boost arrivals and further develop the sector.
However, inflation is projected to reach 2.3 percent this year, largely due to increased import duties on some goods. IMF also highlighted growing uncertainty regarding economic stability, calling it a risk factor for future growth.
Key concerns outlined by the IMF include increased pressure on the current account deficit and foreign exchange reserves, as well as a rising budget deficit and national debt. The organization also warned that the Maldives economy remains vulnerable in the medium term, particularly due to climate change risks.
To address these issues, the IMF recommended urgent fiscal policy changes to curb rising debt. It suggested revenue-enhancing measures alongside cost-cutting strategies, better targeting of subsidies, and prioritization of Public Sector Investment Program (PSIP) projects.
Additionally, the IMF advised reducing costs in Aasandha, the national health insurance scheme, and in state-owned enterprises.
The IMF added that the reform agenda announced by the Maldives government would be crucial in stabilizing the economy.
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