Forecasts show that the Maldives national debt including sovereign guarantees will reach MVR 113 billion in 2023.
According to the proposed state budget, Internal borrowings are expected to rise from MVR 57 billion to MVR 62 billion in 2023. It is anticipated that external borrowing will rise from MVR 35 billion to MVR 40 billion and the sum of sovereign guarantee is expected to be reduced from MVR 12.4 billion to MVR 11.7 billion, according to the Ministry of Finance.
National debt for 2023 is estimated to be at 108 percent of GDP. By the end of this year total government debt will amount to 111 percent GDP which MVR 106 billion. The Ministry’s fiscal strategy is to reduce the debt percentage by GDP to 102 percent by 2025.
The debt per capita of the 540,000 population of the Maldives would amount to MVR 210,555 when it reaches to 113 billion.
According to the Finance Ministry, estimates place the overall debt stock from 2019 through 2022 at MVR 46 billion and domestic debt will almost double during this period, going from MVR 32 billion to MVR 62 billion. It is anticipated that external borrowing will rise by MVR 18 billion.
Maldives' debt has increased drastically in 2020 due to the decline in GDP levels which necessitated external and internal borrowings to maintain national expenditure. Prior to the Covid-19 outbreak, country's debt to GDP stood at 79 percent, which amounts to MVR 68 billion. In 2020, debt to productivity reached 150 percent.
In terms of GDP ratio, 60 percent is the advisable fiscal percentage for debt maintenance for developing countries. Given the low level of reserves in the Maldives, multilateral organizations like the World Bank and International Monetary Fund have called attention to the issue of rising government debt and the risks of debt default.
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