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.