President Muizzu's administration pays off MVR 13 billion in debt

In recent years, the Maldives' economy has grappled with increasing debt and decreased revenues, a situation exacerbated by the COVID-19 pandemic. The nation faced significant financial challenges, raising concerns about a potential economic crisis similar to that of Sri Lanka. In response, the previous administration under President Ibrahim Mohamed Solih implemented several measures to curb state spending and boost revenues. These measures included reducing the number of state-sponsored trips and increasing taxes.

Despite these efforts, the Maldives continued to experience rising debt, leading to public concern. In the most recent elections, a new administration led by President Dr. Mohamed Muizzu was voted in with hopes of steering the economy towards stability. The new government has focused on halting the printing of money and making substantial efforts to pay off the nation's debt. Within the first half-year of his administration, President Muizzu announced the repayment of MVR 13 billion in debt without resorting to printing more money.

Specifically, the government has paid MVR 4 billion to local companies, MVR 7 billion to state-owned enterprises, and MVR 2.7 billion in foreign debt. This totals around MVR 13 billion repaid in recent months. Additionally, the administration has significantly increased the sovereign development fund from USD 2 million to USD 54 million, with a goal of reaching USD 100 million by the end of 2024 as well.

However, despite these positive steps, the Maldives still face substantial economic challenges. The national debt stands at about 110% of GDP, with expectations of rising to 114% by the end of the year. Although the optics are looking more positive compared to 2023 as the debt to GDP percentage was at 116 percent in 2023, this showcases that the Government still has ways to go before reaching its goal.