The Maldives is confronted with escalating debt, even as the World Bank forecasts a modest 4.7% economic growth for the nation this year. The World Bank underscores the urgent need for reforms to bolster Maldives’ economic resilience and mitigate financial risks.
Highlighting the economic challenges ahead, the World Bank report paints a bleak picture of the Maldives’ key sectors, including tourism. Despite a surge in tourist arrivals, the report notes that reduced spending per visitor and shorter stays have failed to bolster GDP growth significantly.
Subsidy reforms, a vital component of the government’s fiscal agenda, are expected to impact household incomes and dampen government investment, further exacerbating economic pressures.
In response to these challenges, the World Bank stresses that the government must swiftly implement its fiscal reform policies to foster sustainable economic growth and assures that collaboration between the government and the World Bank will facilitate this endeavour.
The report underscores the urgency of implementing the government’s fiscal reform agenda, which includes subsidy reform, strengthening state-owned enterprises, improving health spending efficiency, and enhancing strategic investment planning.
The government, in turn, has pledged to adhere to an economic agenda geared towards reform, with commitments to overhaul subsidies, bolster state-owned enterprises, optimize health spending, and enhance strategic investment planning.
Despite the growth forecast of 4.7%, the World Bank’s biennial report issues a cautionary note, warning of the potential for escalating debt levels if fiscal measures are not promptly implemented.
Last year, the economy contracted by 4.7%, according to the Maldives Monetary Authority’s annual report.
