Minister of Finance Ibrahim Ameer has stated the Maldivian economy is still in a strong position, and there is no risk that the country will default on its debts.
The finance minister made the remarks following a report by the US investment bank, JP Morgan, that the Maldives is among the countries that are under the risk of falling into the same economic situation as Sri Lanka, with the foreign reserve expected to be exhausted soon, leaving the country debt-ridden and unable to pay off loans.
Speaking to the press, Finance Minister Ameer said the report which made the claims on the Maldivian economy was not an official statement by JP Morgan, but rather was based on an interview given to Reuters. The minister noted the report was not based on an official study of the actual economic and financial situation of the Maldives, as indicated by the contrast in the points highlighted in the report and the current reality. He said the GDP growth of the Maldives is fast enough to remove any risks of defaulting on debts.
The finance minister further noted the Maldives did face the risk of defaulting last year, with a USD250 million bond maturing in June this year. However, the minister noted USD192 million of the bond has been paid back with the help of Sukuk liability management carried out in 2021. He added the government has the funds to pay off the remaining USD62 million, which includes interest.
Furthermore, Minister Ameer said the Maldives has USD800 million in its usable reserve. He said the biggest loan to pay back is due in 2026, and there is no concern that the country would not be able to pay off this loan.
The finance minister further stated the GDP growth of the Maldives is currently between 12-18%, which matches the projections made before the start of the year. He noted the tourism industry, which forms the backbone of the local economy, is growing at a steady pace and nearing the pre-pandemic figures despite some negative impacts of the Russia-Ukraine conflict.
The finance minister further noted the Russia-Ukraine conflict is indeed the biggest risk currently faced by the economy, although the government is taking strong measures to ensure the impacts are not felt by the public. As such, he said measures are to be taken to counter the impacts of the conflict on fuel prices and stocks. However, he said development projects will not be affected by the rise in fuel prices, as funds for major projects such as the Greater Male’ Connectivity Project (GMCP) are arranged from abroad.
Many international financial organisations such as the International Monetary Fund (IMF) and the World Bank have stated the Maldives is among the fastest growing economies post-pandemic. As such, GDP growth of the Maldives has been projected to be much faster this year compared to other countries in the region.
Source: psmnews