IMF warns international reserves decline, debt distress in Maldives

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Maldives Monetary Authority Building (Photo / Corporate Maldives)

The International Monetary Fund (IMF) has warned that Maldives’ foreign exchange reserves are falling and the debt is rising, with the economic outlook subjected to significant downside risks.

An IMF delegation visited Maldives last month to assess the country’s economic situation. The delegation issued a statement on Tuesday explaining its findings and views, and economic advice.

The IMF said the country’s economy is growing, yet is at risk of declining foreign exchange reserves and rising debt.

The report noted that inflation is projected to reach 3.1% in 2022, reflecting the partial pass-through from higher global food and energy prices due to increasing price subsidies, and spending pressures for the 2023 elections.

Furthermore IMF stressed that continued support to state-owned enterprises (SOEs), mostly through subsidies and capital contributions to repay debt contracted with sovereign guarantees, remains a key factor adding to fiscal vulnerabilities.

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