September 14, Colombo (LNW): The Maldivian government has downplayed concerns over its current financial struggles, characterising them as “temporary,” and dismissed the possibility of seeking a bailout from the International Monetary Fund (IMF).
Despite warnings of a potential sovereign default, the Indian Ocean nation, famed for its luxury resorts and celebrity visitors, insists it will navigate its fiscal challenges independently.
Speaking in Colombo, Foreign Minister Moosa Zameer reaffirmed the government’s strategy to tackle its debt obligations through tax reforms and restructuring state-owned enterprises.
“We have bilateral partners who are very sensitive to our needs and our situation,” Zameer remarked, adding that the Maldives is not in immediate talks with the IMF.
He attributed the financial strain to a “dip in reserves” but expressed confidence that the situation would improve with upcoming tax hikes and rationalisation efforts.
Accompanied by Finance Minister Mohamed Shafeeq, Zameer was in Sri Lanka for discussions with local central bank officials.
He emphasised that the Maldivian government is pressing forward with tax increases to meet its debt servicing obligations, anticipating that these fiscal adjustments would alleviate the current economic stress.
The Maldives counts China and India as its two largest bilateral lenders, with the nation’s foreign debt reaching $3.37 billion, roughly 45 per cent of its gross domestic product, in the first quarter of this year.
China holds approximately 20 per cent of this external debt, while India accounts for just under 18 per cent.
President Mohamed Muizzu, who assumed office a year ago, initially campaigned on reducing Indian military presence in the Maldives and strengthening ties with China.
Despite some initial “rough patches,” Zameer noted that the Maldives has since “cleared misunderstandings” with India, maintaining robust relationships with both China and India.
China has pledged further financial support following Muizzu’s ascent to power, with the President expressing gratitude for Beijing’s “selfless assistance” during his state visit shortly after taking office.
This commitment comes in the face of recent economic setbacks, including a Moody’s credit rating downgrade to Caa2, signalling high credit risk. In June, Fitch also downgraded the Maldives, citing declining foreign currency reserves and a mounting debt servicing burden of $409 million this year.
Despite these warnings, Zameer conveyed optimism that ongoing reforms and strategic partnerships would enable the Maldives to weather its current financial difficulties without external bailout interventions.
The Maldivian government’s stance suggests a focus on self-reliance and regional partnerships, aiming to stabilise the economy through domestic reforms and bilateral support rather than resorting to international financial aid.
