The International Monetary Fund (IMF) has projected that the Maldives' economic growth will slow down to one percent, despite ongoing government efforts to stabilize the economy.
The IMF disclosed this in a report published following a delegation's visit to the country this year as part of its annual "Article IV Consultation."
The reasons cited by the IMF for the slowdown in economic growth include international conflicts and rising commodity prices. Specific challenges facing the Maldives include the impact of ongoing tensions in the Middle East, a slowdown in the tourism sector, and increased import bills and subsidy costs driven by rising global energy prices.
The IMF noted that while the Maldivian economy remains resilient, public spending and debt levels remain high. As a result, the risk of external debt distress continues to be categorized as high.
Despite these challenges, the IMF observed that measures taken over the past year to reduce expenditure and increase revenue have provided some relief. Additionally, foreign currency reserves saw an improvement due to assistance from partner nations and growth in tourism before the disruptions caused by global conflicts.
The IMF highlighted the Maldives' consistent track record of meeting its debt obligations on time as an achievement.
The IMF expressed optimism that the economy would recover in the coming years following the challenges of the current year, projecting that growth will begin to accelerate again next year.
According to the institution's forecasts, economic growth is expected to average four percent over the medium term.
While predicting a rebound in economic momentum in the short term, the IMF urged the implementation of further measures to maintain economic stability.
These recommendations include reforming subsidy policies to ensure they are targeted only at those in need and reducing energy costs by increasing the use of renewable energy. The IMF also advised strengthening the oversight and operational efficiency of state-owned enterprises to reduce the fiscal burden on the state.
Furthermore, the IMF recommended conducting open market operations to maintain the value of the Maldivian Rufiyaa.
