Maldives National Debt to surpass MVR 105 billion in 2022

The Maldives might be a famous tourist spot that visitors from all across the globe are dying to visit at least once in a lifetime, for the locals’ life on these beautiful islands is anything but the peaceful vacations that are advertised on the media.

Maybe paying thousands of dollars might buy the happiness that many are seeking in the Maldives, but reaching that goal in this country has become anything but possible as the debt in the Maldives is beyond imaginable for a country that makes billions just from its tourism industry.

The country's debt is projected to reach MVR 105 billion by the end of 2022, reaching more than 110 percent of GDP, still Government appeared to turn a blind eye to the dire situation. Contracts upon contracts continued to be signed within the year 2022, and while the construction of these infrastructures might come to fruition one day, signing up for millions of dollars for future contracts while the country's economy continued to plummet was something no one expected the Government to do.

And while projects continued to be signed throughout the year, many are still waiting to see any major progress on projects such as the Thilamale bridge – and other infrastructure projects such as the terminal of the Velana International Airport. 

It is a fact that the economy of the Maldives, and all the other countries suffered heavily due to COVID-19 and the conflict between Russia and Ukraine, but how long will these two excuses continue to be used by the Government and policymakers for the amount of debt that has been cumulating in the Maldives?

With the tourism industry coming back better than ever following the pandemic, making billions, it is about high time we start wondering where all those billions are going towards if the Government is struggling so much to pay off its daily expenditure.

While the Auditor General Office claims that the Maldivian Government will require MVR 30.5 billion to pay off the country's debt over the next four years, how likely is it that a large amount of debt that has been cumulated over the years can get paid off in just four years? And how will a country like the Maldives pay off such heavy debts while still supporting an economy that heavily relies on one sector that is easily affected by pandemics or any other natural disasters?

While the Government has come up with a plan to increase the internal revenues of the country by taking measures such as increasing GST, and TGST and cutting down Government spending, the real question is whether these plans will get implemented properly. When it comes to increased taxes, or paying taxes in general, one of the things many have come to notice is the lack of action taken when it comes to resorts and resorts owners not paying millions in taxes while the normal citizen is chased down for the little obligations that they have.

In addition to this, many also fear that the sudden plans to increase the TGST may have negative impacts on the Maldivian tourism industry as a vacation in the Maldives already comes with an extremely hefty price tag.

However, even when the measures seem to be extremely strict they might be necessary as the Maldives has already witnessed the neighbouring country Sri Lanka already going through a severe economic crash in 2022 due to the large amount of debt the country was unable to pay off.

And it has become extremely terrifying to wonder if our own country may suffer the same consequences if proper action is not taken by the Government and policymakers.