IMF approves US$92.5 million for macroeconomic programme

The “blended financing arrangements” include a 36-month US$79.3 stand-by agreement, 600 per cent of the Maldives’ quota, and a 24-month US$13.2 under the fund’s exogenous shock facility high access component.

“The Maldivian economy was severely hit by the global crisis through significant declines in Maldives’ tourism receipts, capital inflows, and goods exports. Coming after unsustainable public spending over the last few years—partly reflecting post-tsunami reconstruction efforts—the crisis led to a very large fiscal deficit, a sharply weakened balance of payments position, and reserve losses,” reads a statement by Takatoshi Kato, deputy managing director and acting chair of the IMF executive board.

“The government’s ambitious policy program, supported by the IMF, is aimed at addressing the impact of the global economic crisis and restoring macroeconomic stability and fiscal sustainability. At the core of the program is a very strong effort to bring down the fiscal deficit while protecting social spending. To that end, the authorities are taking immediate action to cut spending, including unwinding part of the recent large wage increases, and are introducing new revenue measures to broaden the tax base. They have also taken steps to reform the civil service, improve the targeting of subsidies to the poor, and transfer enterprises and services to the private sector.”