Maldives Government Ensures Preparation for Financial Crisis

• Maldives government reassures against potential default despite global lenders and rating agencies indicating a high risk of debt distress.
• Minister of Foreign Affairs Moosa Zameer and Minister of Finance Mohamed Shafeeq ruled out a default and emphasized the government’s efforts towards fiscal consolidation and reform.
• The assurance comes after Moody’s downgraded the Maldives’ credit rating and warned of a full-blown debt crisis.
• President Mohamed Muizzu, who took office in November 2023, faces a challenge due to high external debt.
• The Maldives’ largest creditor is China, and India is another key lender.
• The government is considering options such as a possible debt freeze, currency swaps, and local currency settlements.
• The Maldives’ Ministry of Economic Development & Trade has signed an agreement with the People’s Bank of China to establish a local currency settlement framework.
• The Finance Ministry is engaged with all its bilateral and multilateral partners to meet financing requirements.
• Tourism sector growth is expected to boost growth, with Chinese arrivals leading the list in 2024.