The Mohamed Muizzu administration’s efforts over the past year to reduce expenditure and extend repayment periods on foreign loans have silenced talk, by external financial institutions, of an imminent sovereign default, Minister of Finance Moosa Zameer has said.

Replying to a Member of Parliament (MP) during parliamentary question time, Zameer said that the International Monetary Fund (IMF) had stated that the Maldives would not be able to meet its obligations to creditors should it attempt to fully comply with its debt obligations while also providing for the needs of its people.

However, according to Zameer, the country has now avoided the sovereign default scenario by reducing state expenditure and restructuring debt repayments.

“However, the President has rescued the Maldives from that scenario by improving revenue streams and also rationalising expenditures and at the same time extending the terms of some of our debt by working bilaterally with friendly countries. And all that is now settled,” he said.

When the administration took over, the state was facing a debt of MVR 124 billion, half of which was the debt of the previous administration and the other portion was the debt of the administration before that, Zameer said.

However, with the work put in by the current administration, the talk, by external rating agencies, that the Maldives would default has also now stopped, he said.

“Now I don’t think anyone is talking. For example, yesterday the IMF, as did the rating agencies, said we should cut spending, but talk about the Maldives defaulting or going into insolvency has stopped,” Zameer said.

Zameer was summoned to parliament and asked why the publication of the state’s financial statements was halted last June. In response, he said this was done because some expenditure incurred in the previous year had been included in the current 2024 budget.

The Maldives’ total debt, as of the end of 2023, stood at MVR 124.8 billion. With the increases this year, debt is expected to rise to MVR 146.6 billion by the end of the year; a figure equivalent to 117 percent of national productivity.

Total debt by the end of 2025 is estimated at MVR 150 billion.