As a new administration has been elected in the Maldives, one of the biggest tasks that the newly elected president Mohamed Muizz and his team would have to take on would be managing the extensive debt that the Maldives has accumulated over the years.
The debt situation of the Maldives has been a growing concern, especially since the COVID-19 pandemic, during which the Government accumulated a large sum of debt, from domestic and external borrowings. According to reports published by the Maldives Monetary Authority (MMA), the debt of the Government of the Maldives and the Government’s responsibility under sovereign guarantees has reached a staggering MVR 118.9 billion.
One of the easiest ways to think of exactly how worrisome the debt situation has gotten in the Maldives would be to refer to the latest census figures, which state that the country’s debt is around MVR 227,812 per person! Most of this debt was accumulated during the COVID-19 period, and while the Maldives was deemed notable for how the country managed to overcome to pandemic, the deeper-rooted problems which we often tend to not address when it comes to the pandemic is how the Maldives borrowed USD 92 million in emergency support, out of which direct Government debt stands at MVR 103.6 billion.
The statistics published by MMA also state that the Maldivian Government Government has borrowed foreign debt of MVR 50.9 billion and domestic debt stands at MVR 66.3 billion as of now.
As the administration of former President Ibrahim Mohamed Solih stepped down, one of the things that was highly notable during his administration was the increasing amount of borrowings and the failure to come up with a proper plan to manage the debt within the nation until it reached a point of public concern. With the debt within the nation reaching an extensive amount, the country saw an increase in taxes at the start of 2023 in order to increase internal revenues to pay off the debt.
Even with the measures that were set into place, the debt in the Maldives is so high that it was one of the first points of concern that was addressed during the inaugural speech of the new President Dr Mohamed Muizz.
As a new administration has yet again been elected in the Maldives, the country has high hopes for the new President and his administration to take on the debt situation in the Maldives more harshly, and lead the country to a better path than it has been heading in the past five years.