The International Monetary Fund (IMF) on February 7 warned Maldives of a high risk of debt crisis amid its growing closeness to China.
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| IMF warns Maldives of high risk of debt crisis. |
The IMF called on the Maldives to “adjust its policies urgently”. In a statement, the IMF said: “Without significant policy changes, the overall fiscal deficit and public debt are projected to continue to rise. The Maldives remains at high risk of an external and overall debt crisis.”
The Maldives is taking various measures to boost tourism , including expanding its airport and increasing the number of hotels. The IMF said that while tourism growth is expected to pick up thanks to the infrastructure push, “uncertainties about the outlook remain high and risks are tilted to the downside.”
According to the World Bank, the Maldives borrowed heavily from China for construction projects during the tenure of former President Abdulla Yameen. As a result, the Maldives owed China about 42% of its total foreign debt of more than $3 billion in 2021.
Since Mohamed Muizzu became president of the Maldives last November, Beijing has pledged more funding to the island nation. During a visit to China last month, Muizzu thanked Beijing for its “wholehearted support” in providing development funds.
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