News Desk
MALE’ — The International Monetary Fund expects the Maldivian economy to slow sharply this year before recovering in 2027, according to a report issued following a ten-day staff visit to Male’ earlier this month.
The IMF mission, which visited from 4 to 13 June, said growth this year is likely to slow to around 1 percent, down from previous estimates, as the war in the Middle East pushes up oil prices and weighs on tourism. The fund expects growth to recover next year and return to the medium-term trend of around 4 percent by 2027.
The visit came in the same window as the government’s repayment of the $524.68 million Sukuk bond in April, along with settlement of other major external obligations.
The IMF said clearing those debts reduced the near-term risk of default but cautioned that debt sustainability risks remain elevated. Higher global oil prices are expected to widen the current account deficit further by raising the cost of imports.
To manage those risks and sustain growth over the long term, the fund called for reforms to fiscal policy, investment in human capital, improvements to the business environment, and stronger resilience to climate change. It noted that the Maldives’ growing network of free trade and financial agreements with other countries should help reduce dependence on any single market over time.
The IMF also urged stronger legal and administrative governance to support private sector growth and welcomed the Maldives Monetary Authority’s decision to resume open market operations, saying the practice should continue to support financial stability.
On energy, the fund said a shift toward renewables would support sustainable growth and reduce the subsidy burden during periods of high oil prices.
The report reiterated the importance of continuing the fiscal reform programme launched last year to reduce public debt, including cuts to capital spending, higher revenue collection, and a review of the subsidy system to better target support toward those who need it most.
Looking ahead, the IMF flagged global uncertainty, energy prices and constrained access to external financing as the principal risks to the outlook. It said the government’s core priorities should remain fiscal discipline, debt management and strengthening the public finances.
