According to statistics from the Ministry of Finance, as of the 7th of this month, 99.9 percent of the amount allocated in the budget for debt repayment by the state this year has been spent, leaving only two million rufiyaa remaining for loan payments.
When the Ministry of Finance disclosed details of state revenue and expenditure last Thursday, statistics showed that the government had spent 3,870 million rufiyaa on debt servicing up to the 7th of this month. While 3,873 million rufiyaa was budgeted for loan repayments this year, only 2.4 million rufiyaa remains in the budget for debt payments for the rest of the period. The Maldives’ total debt has reached 9.4 billion US dollars, standing at 134 percent of GDP.
Of this, about 600 million dollars, approximately 9.25 billion rufiyaa, needs to be paid this year alone, while next year the amount rises to one billion dollars.
President Dr. Mohamed Muizzu’s government is working on deferring debt repayments and seeking easier terms. As China and India account for a large portion of foreign loans, this government first approached China. So far, China has not provided any debt relief.
This government came to power after the ‘India Out’ campaign, and relations between the two countries deteriorated in the early days of the administration due to an incident where some deputy ministers insulted Indian citizens. However, the government later made significant efforts to improve relations with India, including a presidential visit to India.
Subsequently, Indian Prime Minister Narendra Modi visited the Maldives coinciding with Independence Day this year. During this visit, an agreement was signed to defer 40 percent of the annual loan repayments the Maldives owes to India. Despite economic growth in the Maldives, foreign institutions have been warning for years about the risk of default due to failure to reduce expenditure. Although this government announced financial reform measures to reduce expenses this year, some of these reforms were later decided not to be implemented.
Finance Ministry statistics have shown that with the government not implementing promised subsidy reforms, 99 percent of this year’s subsidy budget has been depleted with five months remaining in the year.
