IMF Warns of High Debt Distress Risk in Maldives, Urges Policy Adjustment
Malé, Maldives: The International Monetary Fund (IMF) has sounded the alarm over the Maldives :- IMF Warns of High Debt Distress Risk in Maldives
KeyPoint’s
- Maldives external debt distress risk IMF
- IMF assessment of Maldives’ financial situation
- Maldives’ reliance on Chinese funding
- Policy adjustment recommendations for Maldives
- Mohamed Muizzu’s presidency and economic policies
- Impact of COVID-19 on Maldives’ economy
- IMF strong warning on economy
February [08/02], [2024] – Malé, Maldives: The International Monetary Fund (IMF) has sounded the alarm over the Maldives’ precarious financial situation, highlighting a “high risk of external and overall debt distress” for the island nation. The IMF’s cautionary statement underscores concerns about the Maldives’ heavy borrowing, particularly from China, and the urgent need for policy adjustments to address looming economic challenges.
Amidst growing financial strains, the Maldives has significantly increased its reliance on Chinese funding, particularly since the ascent of pro-China President Mohamed Muizzu in November 2023. Muizzu’s recent expressions of gratitude towards China for its developmental assistance further underscore the deepening financial ties between the two nations.
The IMF’s assessment, following a comprehensive review of the Maldivian economy, has emphasized the imperative for immediate policy reforms to mitigate the risks associated with escalating fiscal deficits and public debt. While specific details regarding the extent of the Maldives’ foreign debt were not provided by the IMF, the urgent need for policy adjustments was emphasized as crucial to averting a deepening financial crisis.