The International Monetary Fund has warned that the Maldives IMF remains at “high risk of external and overall debt distress”.
The Maldives, which has borrowed heavily from China, remains at “high risk of external and overall debt distress”, the International Monetary Fund (IMF) warned. It also said that there was a need for “urgent policy adjustment”.
Beijing has pledged more funding for the Maldives since pro-China President Mohamed Muizzu took power in November 2023.
Muizzu thanked China last month for its “selfless assistance” for development funds after a visit to Beijing.
The IMF did not give details of the Maldives’ foreign debt but said there was a need for “urgent policy adjustment”.
“Without significant policy changes, the overall fiscal deficits and public debt are projected to stay elevated,” the IMF said after a review of the country’s economy.
“The Maldives remains at high risk of external and overall debt distress,”
The island nation, famed for its white sand beaches and where tourism accounts for nearly a third of the economy, has recovered economically from the Covid-19 pandemic.
But while a planned airport expansion and an increase in hotels are projected to boost growth, the IMF said “uncertainty surrounding the outlook remains high and risks are tilted to the downside”.
Muizzu’s mentor, former president Abdulla Yameen, who ruled for five years until 2018, borrowed heavily from Beijing for construction projects.
That left it owing 42 per cent of its more than $3 billion foreign debt to China in 2021, according to the World Bank, citing the Maldives’ Finance Ministry.
Global east-west shipping lanes pass through the nation’s chain of 1,192 tiny coral islands, stretching around 800 km across the equator.
This article was published on India Today.
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