Maldives downgraded to ‘fragile state’ by IMF

Maldives downgraded to ‘fragile state’ by IMF
December 02 16:40 2017

The Maldives has been downgraded to a “fragile state” by the IMF because of the tense political situation, the way business is regulated and how the country’s finances and budgets have been run in recent years.

The new classification is the latest blow to the Maldivian economy from the institution, which has repeatedly spoken of the high levels of debt being driven by the current administration’s ambitious infrastructure scale-up.

Other “fragile states” include Afghanistan, Haiti, Kosovo, Liberia, Mali, Myanmar, South Sudan, and Timor-Leste, according to the IMF.

“Given extensive government-guaranteed investment and lending, the impact of a severe tourism downturn on the fiscal position could be considerable,” said the body in its 88-page report about the Maldives.

“Other fiscal risks include possibly higher expenditures related to the 2018 Presidential election, as well as those associated with climate change mitigation and an increase in non-concessional financing.

“A shallow financial system concentrated in tourism and dominated by state-owned banks accentuates the linkages of risks across sectors. Political and domestic security risks remain elevated and are hard to predict with potential adverse economic effects if they escalate.”

But President Abdulla Yameen and others from the ruling PPM party have previously hit out at the IMF and World Bank over their dire warnings.

The government has recently pushed through a number of eye-watering measures including a record budget, a controversial Free Trade Agreement with China and a whopping US$370 million sovereign guarantee with little to no debate or scrutiny about what impact these will have on the country’s economy or finances.

Last month Finance Minister Ahmed Munavvar told parliament that, at the end of 2018, public debt would be around MVR43 billion or 60 percent of GDP.

The IMF and the World Bank predicts Maldivian debt to reach 121 percent of GDP by 2020.

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5 Comments

  1. Private Tourist
    December 02, 17:18 #1 Private Tourist

    Well I hope ‘Gucci’ Yameen read the IMF report, not that his limited intelleginece would be able to make head or tail of it.

    Well, ‘Fragile’ state is polite way of saying ‘Banana Republic’. Well, it could be worse, it could be one step down and Maldives could join RUINED with Zimbabwe.

    Of course, Yameen, whose overwhelming financial credentials will probably blast the IMF for being uninformed. Oh no, I remember now, he doesn’t do it personally, he gets the Fisheries Minister to drop his bait bucket and put down his rod, put on his suit and do the blasting of the IMF for him.

    It is like watching a series of “Yes Minister”.

    I am giving the Maldives less than 12 months before something serious occurs, the Maldives becomes a no-go area for tourists and the economy collapses.

    You will know when it is getting near, Yameen, His wife, family, cooks, cleaners and security men will all leave for Singapore for Medical Treatment.

    Oh, yes he will “win” the 2018 elections. Simply because the police and army will beat anyone turning up to the polling booths to vote for anyone but him, the opposition MPs will all be on death row for simply wishing to be elected.

    Business as usual….

    and when he has finished milking the system dry, when he no longer has enough hard dollars to pay off the gangs and the cronies in the military… he will quietly slip away as described above before the explosion occurs.

    Reply to this comment
  2. Michael Fahmy (not nickname)
    December 02, 22:06 #2 Michael Fahmy (not nickname)

    Classified as a fragile state by the world-body, the IMF, Maldives is in unenviable company with other similarly classified countries. A country over-reliant on so-called politicians and holiday-resort owning tycoons, Maldives is on a collision course with its own citizens, neighbouring countries and many international organisations.

    Nothing less than a fundamental change in its cultural outlook, historical imperatives and religious thought will save the Maldives from a situation, in which it navigates itself from one disaster to another, to secure the long-term future of the country.

    The country needs to be literally, and metaphorically, born again.

    Does the country have the will, and leadership, for this necessary transformation? It is an open question. I cannot answer that.

    Reply to this comment
  3. Kareem
    December 03, 12:00 #3 Kareem

    Friendship bridge is falling down.
    End is near.

    Reply to this comment
  4. Respect
    December 03, 19:41 #4 Respect

    Michael Fahmy you are amazingly hopeful. Most of us have become so cynical that the question you ask never even occurs to us anymore. Genuinely respect this michael Fahmys views and always love his comments.

    Reply to this comment
  5. Zoo
    December 06, 21:41 #5 Zoo

    not that i support YAG but I dont think its gona fall anytime soon 🙁

    Reply to this comment

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