The government debt has edged closer to MVR 100 billion within the first three months of 2022.
As per the statistics revealed by the Ministry of Finance, the total debt from loans and sovereign guarantees has increased by 4.3 billion compared to the end of 2021. The majority of the loans were taken to fund urban development projects.
The government debt is at MVR 85 billion without including sovereign guarantees, from which MVR 33 billion is recorded as foreign debt and MVR 52 billion as internal debt. With the inclusion of sovereign guarantees, the foreign debt stands at MVR 46 billion and MVR 56 billion as internal debt.
The government debt is currently equivalent to 97% of the country’s Gross Domestic Product (GDP) compared to 104% recorded in 2021 which still surpasses the 60% GDP throttle stated in the law. The decrease in debt to GDP ratio is due to the increase in productivity recorded in the first three months of 2022 which is at MVR 87 billion compared to MVR 10 billion in 2021.
According to the forecasts set by Maldives Monetary Authority (MMA), the government debt was estimated to increase up to MVR 103 billion by the end of 2022 which is equivalent to 112% of the country’s GDP.
However, Minister of Finance Ibrahim Ameer has assured that the Maldivian economy is still in a strong position, and there is no risk that the country will default on its debts following a report by the US investment bank, JP Morgan, that the Maldives is among the countries that are under the risk of falling into the same economic situation as Sri Lanka, with the foreign reserve expected to be exhausted soon, leaving the country debt-ridden and unable to pay off loans.