By Emmanuel Nduka
The government of Maldives has reiterated that its financial troubles are “temporary”, and that it has no plans to seek an International Monetary Fund (IMF) bailout after warnings of a possible sovereign default.
Moosa Zameer, Foreign Minister of the luxury tourist destination said the Indian Ocean archipelago, best known for its upscale resorts and celebrity visitors, was pressing ahead with tax hikes to meet its debt servicing obligations.
“We have bilateral partners who are very sensitive to our needs and our situation,” Zameer told reporters in Colombo on Friday night.
“I seriously don’t think it is a time where we will be right now engaging with the IMF… The issue that we have is very temporary because currently we are having a dip in reserves,” he added.
Zameer added that tax reforms, along with the rationalisation of state-owned enterprises, would improve liquidity.
The minister was visiting Sri Lanka along with Finance Minister Mohamed Shafeeq to meet with local central bankers and other officials.
Heritage Times HT reports that China and India are the two largest bilateral lenders to the Maldives, a tiny nation of 1,192 tiny coral islands in the Indian Ocean scattered across the equator.
The country’s president, Mohamed Muizzu, came to power a year ago on the back of a campaign to evict a small contingent of Indian troops deployed in the Maldives and pursue closer ties with China.
After the removal of the troops, the two nations have mended fences and had “cleared misunderstandings,” Zameer said.
“At the start of our government, we did have some rough patches, you know. We have fantastic bilateral relations with both China and India… Both countries continue to support us,” he added.
China has pledged more funding since last year’s victory by Muizzu, who thanked the country for its “selfless assistance” for development funds on a state visit to Beijing shortly after taking power.
Official data showed the Maldives’ foreign debt at $3.37 billion in the first quarter of this year, equating to around 45 percent of gross domestic product.
China accounted for about 20 percent of the external debt while India owned just under 18 percent.
Zameer’s visit came days after Moody’s Ratings downgraded the Maldives’ credit rating by one notch to Caa2, considered a high credit risk.
Another ratings agency – Fitch, downgraded the Maldives in June, saying that dwindling foreign currency reserves posed a financial risk, with the government’s debt servicing obligations amounting to $409 million so far this year.
