The Maldives is seeking assistance from the World Bank and other partners to strengthen foreign-exchange reserves as higher energy costs and softer tourism inflows put pressure on the fiscal position.
Finance Minister Hassan Zareer told Reuters that the sharp rise in global fuel prices linked to conflict in the Middle East has forced the government to triple spending on energy subsidies this year. The extra outlay could widen the budget deficit to around 9 percent of GDP, above the earlier target of 7.1 percent.
Zareer said the government remains committed to fiscal consolidation and lower expenditure, but needs additional support to build buffers. Annual debt repayments of $300 million to $400 million are expected for the next several years, most of which will be met from public revenue.
Economic growth is projected at only about 1 percent in 2026, reflecting the twin shocks of elevated energy prices and lower tourist numbers. To support arrivals next year, authorities plan to lease additional aircraft for the national carrier and expand flights to Australia, now the eighth-largest source market. Discussions are also under way with seven other airlines on higher frequencies.
The World Bank is expected to provide $250 million over two to three years. A $1.5 billion five-year framework was signed last month with the International Islamic Trade Finance Corporation. Moody’s recently upgraded the sovereign rating to Caa1, citing successful debt repayments and stronger external buffers.
Zareer spoke ahead of the annual meetings of the IMF and World Bank in Bangkok.