During a presentation earlier this week Dr Rodrigo Cubeiro observed that the tourism sector had recovered from the recession earlier than expected because of the increasing number of arrivals of Chinese tourists.

However he observed that the Maldives has the highest per-capita government expenditure of any island nation, and urged the government to reduce this before the Maldives’ economic situation became serious.

Reducing that expenditure was in the hands politicians and the government, he said.

In June, the IMF’s Country Report for the Maldives pegged the country’s fiscal deficit in 2009 at 26.25 percent, and noted that while the “political climate for public expenditure cuts remains difficult… the coming months [would] be a crucial test of [the government’s] ability to prevail.”

The IMF report acknowledged that “direct redundancies were proving difficult”, however “the transfer of employees to the private sector (which accounts for about two fifths of the planned payroll cuts) has taken place in line with projections.”

Nonetheless, the IMF calculated that if the government continued to pursue economic reform at current pace and policy, the country’s fiscal deficit would increase by one percent of GDP in 2010 and 4.5 percent of GDP in 2011.