The Maldives has said its financial difficulties are “temporary” and the tourist destination has no plans to seek a bailout from the International Monetary Fund (IMF) after warnings of a possible default.
Foreign Minister Moosa Zameer said the Indian Ocean archipelago, best known for its upscale resorts, was continuing tax hikes to meet its debt-servicing obligations.
“I seriously do not think this is the time to engage with the IMF. Our problem is very temporary because we currently have a decline in our reserves,” he said.
In May, the IMF urged the Maldives to urgently increase revenues and cut spending and external borrowing to avoid a major economic crisis.
According to official data, the Maldives’ external debt stood at $3.37 billion in the first quarter of this year, equivalent to about 45 percent of gross domestic product.
“We have partners who are very sensitive to our needs and our situation,” he told reporters in Colombo on Friday evening.
According to him, tax reforms and streamlining the management of state-owned enterprises should improve the liquidity problem.
Mr Zameer was visiting Sri Lanka with Finance Minister Mohamed Shafeeq to meet local central bankers and other officials.
China and India are the two largest bilateral lenders to the Maldives, a small country of 1,192 coral islands in the Indian Ocean.
President Mohamed Muizzu came to power a year ago following a campaign to expel a small contingent of Indian troops deployed in the Maldives and strengthen ties with China.
China has pledged more funding since the victory last year of Mohamed Muizzu, who thanked the country for its “selfless assistance” with development funds during a state visit to Beijing shortly after taking office.
Read more
China accounted for about 20% of the external debt, while India held just under 18%.
Zameer’s visit came days after Moody’s Ratings downgraded Maldives’ credit rating by one notch to Caa2, considered a high credit risk.
Ratings agency Fitch also downgraded its rating in June, saying declining foreign exchange reserves posed a financial risk. It noted that debt servicing obligations of $409 million this year were adding to tensions.
aj-sk/LyS
