Finance Minister Moosa Zameer has stated that international financial institutions, including the International Monetary Fund (IMF) and credit rating agencies, are no longer warning about the Maldives being at risk of bankruptcy. The announcement was made during a parliamentary sitting on Tuesday, where Zameer addressed concerns raised by South Feydhoo MP Ibrahim Didi about the country’s mounting debt.
Zameer highlighted that the Maldives’ debt burden stood at MVR 124 billion when the current administration took office in November last year. He attributed half of this debt to the previous Maldivian Democratic Party (MDP) administration.
According to Zameer, the Maldives faced the prospect of financial collapse if it had been forced to meet its debt repayment deadlines while maintaining public services. However, he credited President Dr Mohamed Muizzu’s policies for averting such a scenario. These measures included negotiating with bilateral partners, extending debt repayment schedules, boosting revenue streams, and managing government expenses.
“The Maldives has been removed from this scenario, and no one is currently warning of bankruptcy,” Zameer said. He added that rating agencies now focus on urging the government to reduce spending rather than discussing insolvency risks.
Debt Challenges Persist
Despite the minister’s optimistic outlook, the Maldives’ high debt burden remains a critical concern. The country faces an external debt service obligation of approximately USD 600 million in 2025, and over USD 1 billion in 2026, including a USD 500 million sukuk.
Credit rating agencies Moody’s and Fitch have previously downgraded the Maldives’ credit rating, citing the risk of default. In its October biannual update, the World Bank noted that while the Maldives continues to experience economic growth, the increasing public debt and high fiscal spending, particularly on public sector investments and subsidies, pose significant challenges.
Debt Reform Measures
The Finance Ministry estimates that total public and publicly guaranteed debt will reach 118 percent of GDP by the end of 2024, up from 116 percent in the first quarter of the year.
To address these concerns, the administration has implemented various measures, including reforms to the Aasandha public health insurance scheme, reducing the number of political appointees, and raising taxes. Additional reforms are planned for 2025, focusing on subsidies, welfare programmes, and State-Owned Enterprises.
While the government has assured creditors and investors of its commitment to honour debt obligations, experts continue to emphasise the need for prudent fiscal management to ensure long-term economic stability.
