With Chinese loans looming, Maldives gets IMF warning over ‘debt distress’
- As of June 2023, the Export-Import Bank of China owned 25.2 per cent of the Maldives’ external debt and was the country’s biggest single lender
- Official data showed the Maldives’ foreign debt exceeding US$4 billion last year, about 118 per cent of GDP and up nearly US$250 million from 2022
The International Monetary Fund warned the Maldives against looming “debt distress” on Monday, as the small but strategically placed luxury tourist destination looks set to borrow more from main creditor China.
Since winning office last year, President Mohamed Muizzu has reoriented the atoll nation – known for its upmarket beach resorts and celebrity holidaymakers – away from traditional benefactor India and towards Beijing.
Last month his party won parliamentary elections in a landslide after promising to build thousands of flats, reclaim more land for urban development and upgrade airports, all with Chinese funding.
Without naming the archipelago’s main lender, the IMF said the Maldives remained “at high risk of external and overall debt distress” without “significant policy changes”.
“Uncertainty surrounding the outlook is high and risks are tilted to the downside, including from delayed fiscal consolidation and weaker growth in key sources [of] markets for tourism,” the IMF said in a statement.
It urged the Maldives to urgently raise revenue, cut spending and reduce external borrowing to avoid a major economic crisis.
