Finance Minister Ibrahim Ameer said on Wednesday that Maldives’ economic status will not follow the path of Sri Lanka’s and that the country’s debt is totally manageable.
He said this in response to a statement made by Maldives Monetary Authority (MMA)’s Governor Ali Hashim, when he was questioned by the Parliament’s Economic Committee earlier in the week regarding the proposed amendments to the Tourism Act to reduce resort rent. Hashim had said a reduced resort rent, which would lower the income generated from this source by 40 percent, may lead Maldives on the path of an economic crisis, much like its neighbor Sri Lanka.
JPMorgan, one of the largest US investment banks, has also placed the Maldives among the most threatened countries with low reserves and non-repayment of loans due to the Russia-Ukraine war and the difficulty of obtaining loans.
However, Finance Minister Ameer had said economic activity in Maldives is going well. He noted that tourist arrivals are quite similar to arrival levels if 2019.
He said there were no difficulty in paying off Maldives' debt and it was being paid as stipulated in the state budget. Therefore, Ameer said there was no fear for an economic default.
"Our GDP growth will improve by 13-18 percent," he said in Dhivehi.
Commenting on the report by JP Morgan, Ameer said Maldives was different than other countries on their list, as made clear by the country's economic activity. He said the tax authority, Maldives Inland Revenue Authority (MIRA), would know so as well as they would be aware of the US Dollars that Maldives is receiving.
Maldives have generated USD 316 million in the past four months through MIRA. The authority has also received MVR 7.4 billion (USD 479 million) in income over the same period.
Ameer said there was no fear of Maldives' reserve running out and the methods they were utilizing to manage the fund were good as well.
MMA's statistics show that the state reserve stood at USD 805 million at the end of 2021. The state reserve soared to USD 865 million at the end of March. The Maldivian reserve did not go below USD 700 million in the first three months of this year.
"Look at our reserve now. We have around 800 million [Rufiyaa]. Even if you look at our reserve you can tell there is no chance of something like that happening," Ameer said.
JP Morgan's report had said there are fears Maldives' reserve will decrease and it may be unable to pay off existing loans.
Ameer noted that Maldives' economy is also facing obstacles due to the war between Russia and Ukraine. He said the price of fuel is increasing worldwide and this will affect the prices of goods in Maldives as well.
MVR 340 million has been allocated in the state budget for oil subsidies. If the number quadruples, oil subsidies will rise to MVR 1.3 billion.