The administration is ready to take the necessary measures to manage the nation’s debt; starting with reforms to state-owned enterprises (SOEs), Minister of Finance Mohamed Shafeeq has said.

The minister, during discussions on the World Bank’s ‘Scaling Back and Rebuilding Buffers’ report on the Maldives, said that implementing reform measures could no longer wait.

Shafeeq attributed 2023’s lacklustre performance to planned reform programmes not being implemented.

“We have no choice but to take measures due to the fragility of our financial situation and debt management. We are ready to do that,” he said.

Explaining how the administration would go about implementing reforms, Shafeeq said priority would be to reform SOEs.

“The administration needs to stabilise the companies. It cannot be postponed. We will start very soon,” he said.

In addition, the administration will take steps to reform the Aasandha [Health] scheme and subsidy system to targeted subsidies, he said. The 2024 budget has allocated MVR 600 million to provide subsidies to those most in need with the reform measures also affecting the way in which subsidies for power, fuel, staples and sewerage services are issued.

“We are ready for all this. We will start these things at the best time,” he said.

Despite the decision to cut costs, the minister said PSIP projects would be implemented as cost-effectively as possible, going on to highlight that the assistance of financial institutions would be needed to implement reform measures.

The World Bank report contains important information and will help in formulating next year’s budget and planning projects, Shafeeq said.

The World Bank report notes that the country’s economy faces several challenges due to its external debt situation. The Maldives’ debt to GDP ratio of 122.9 percent is a significant concern according to the international financial institution which also projected that debt management will be a major challenge in the medium term, given the growing debt, unless strong measures are taken to mitigate its effects.

Shafeeq noted that, while the World Bank may view the reform agenda as too “ambitious”, the administration wanted to get the economy back on track, and growing, as soon as possible.

The World Bank forecasts the Maldives’ economy will grow by 4.7 percent this year noting that, even with higher arrival figures, low spending by tourists, had slowed economic growth.