Maldives ready for fiscal reforms with SOE restructuring start: Finance minister

The Maldivian government on Monday acknowledged shortcomings in implementing debt-reduction measures and announced a renewed commitment to fiscal reform, starting with a focus on state-owned enterprises (SOEs).

Finance Minister Dr Mohamed Shafeeq made the announcement during a discussion on the World Bank report “Scaling Back and Rebuilding Buffers.”

Dr Shafeeq admitted that planned reforms from last year fell short, contributing to the nation’s current financial fragility.

“Due to the fragility of our financial situation and debt management, we have no choice but to take measures,” he said.

The government’s plan prioritises reforming SOEs, aiming to stabilise these companies and improve their efficiency.

“We need to reform companies that make huge losses to the state,” Dr Shafeeq said.

Additionally, the government intends to modify the Aasandha health benefit scheme and subsidy systems, focusing aid on those in greatest need.

Despite cost-cutting measures, the minister assured that projects would continue but with a focus on cost-effectiveness.

The World Bank report’s findings on the challenging external debt situation and high debt-to-GDP ratio (122.9%) resonated with the government. The report also warns of future debt management difficulties unless strong corrective actions are taken.

Dr Shafeeq acknowledged the need for collaboration with financial institutions and highlighted the World Bank report’s valuable insights for formulating future budgets and project planning.