The Maldives has described its current financial challenges as “temporary” and confirmed that it has no plans to seek a bailout from the International Monetary Fund (IMF) despite warnings of a potential sovereign default.
Foreign Minister Moosa Zameer stated that the luxury tourist destination, renowned for its upscale resorts and celebrity visitors, is moving forward with tax hikes to meet its debt servicing obligations.
“We have bilateral partners who are very sensitive to our needs and our situation,” Zameer said during a press briefing in Colombo on Friday night. “I seriously don’t think we will be engaging with the IMF… The issue we are facing is very temporary due to a dip in reserves.”
Zameer added that tax reforms and the rationalisation of state-owned enterprises would help improve liquidity. He visited Sri Lanka alongside Finance Minister Mohamed Shafeeq for meetings with local central bankers and officials.
China and India, the two largest bilateral lenders to the Maldives, have played key roles in supporting the nation, which consists of 1,192 coral islands in the Indian Ocean. President Mohamed Muizzu, who came to power a year ago, initially campaigned on removing Indian troops stationed in the Maldives and strengthening ties with China.
After initial tensions, Zameer said relations with India had improved, stating, “We have fantastic bilateral relations with both China and India… Both countries continue to support us.” China has pledged additional funding since Muizzu’s election and was praised for its “selfless assistance” during his state visit to Beijing.
The Maldives’ foreign debt stood at $3.37 billion in the first quarter of this year, approximately 45% of its gross domestic product (GDP). China holds about 20% of the external debt, while India owns just under 18%.
Zameer’s visit came shortly after Moody’s downgraded the Maldives’ credit rating to Caa2, a high credit risk, following a similar downgrade by Fitch in June. Both agencies cited dwindling foreign currency reserves and the government’s $409 million debt servicing obligations this year as serious financial risks.
(Source: AFP)
