The central bank governor on Monday expressed concern over the Maldives’ mounting national debt.
Local media reported that Ahmed Naseer, who heads up the Maldives Monetary Authority, insisted that the country must maintain financial security and manage the external debt taken on for financing infrastructure and development projects.
The Maldives has borrowed heavily to pay for such projects, although the exact amounts and the borrowing terms are unclear. A study from a US think-tank said that Chinese lending in particular was putting the Maldives at risk of debt distress.
It is not the first time Naseer has warned about the state of the country’s finances.
In October, he expressed concern with the Maldives’ vulnerability to external shocks, such as oil price hikes and reduced tourist arrivals, due to a depleted foreign currency reserve. A month later he criticised the government’s previous budgets.
President Abdulla Yameen’s administration has 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.
In December the Maldives was 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 IMF and the World Bank predict Maldivian debt to reach 121 percent of GDP by 2020.