Finance Minister Ibrahim Ameer said on Wednesday that the Maldives’ economic situation would not follow the path of that of Sri Lanka and that the country’s debt was fully manageable.
He said this in response to a statement made by the Governor of the Maldives Monetary Authority (MMA), Ali Hashim, when questioned by the Parliament’s Economic Committee earlier in the week regarding proposed changes to the tourism law aimed at reducing resort rents. Hashim had said that a reduced resort rent, which would reduce the income generated from this source by 40%, could put the Maldives on the road to economic crisis, just like its neighbor Sri Lanka.
JPMorgan, one of the largest US investment banks, has also placed the Maldives among the most at risk countries with low reserves and loan defaults due to the Russian-Ukrainian war and difficulty obtaining loans.
However, Finance Minister Ameer had said economic activity in the Maldives was doing well. He noted that tourist arrivals are quite similar to arrival levels in 2019.
He said there was no difficulty in repaying the Maldives’ debt and that it was being paid as stipulated in the state budget. Therefore, Ameer said there was no fear of an economic default.
“Our GDP growth will improve by 13-18%,” he told Dhivehi.
Commenting on the JP Morgan report, Ameer said the Maldives was different from other countries on their list, as the country’s economic activity clearly shows. He said the tax authority, the Maldives Revenue Authority (MIRA), would know about it as well as they would know about the US dollars the Maldives receives.
The Maldives has generated $316 million over the past four months through MIRA. The authority also received MVR 7.4 billion ($479 million) in revenue during the same period.
Ameer said there was no fear that the Maldives’ reserves would run out and the methods they used to manage the fund were also good.
MMA stats show the state reserve stood at $805 million at the end of 2021. The state reserve jumped to $865 million at the end of March. The Maldivian reserve has not fallen below $700 million in the first three months of this year.
“Look at our reserve now. We have about 800 million [Rufiyaa]. Even if you look at our stash, you can tell there’s no way something like this will happen,” Ameer said.
The JP Morgan report had said the Maldives’ reserves were feared to dwindle and they might be unable to repay existing loans.
Ameer noted that the economy of the Maldives is also facing obstacles due to the war between Russia and Ukraine. He said the price of fuel is rising all over the world and this will also affect the prices of goods in the Maldives.
MVR 340 million has been allocated in the state budget for oil subsidies. If the number quadruples, oil subsidies will reach MVR 1.3 billion.