- Over the past year, the Maldivian economy has shown resilience amid a challenging macroeconomic and financial environment. Nevertheless, spillovers from the conflict in the Middle East have weighed on economic activity, public finance, and the external position.
- The immediate policy priority would be to recalibrate the policy mix to durably address macroeconomic imbalances, put debt on a downward trajectory, and maintain financial stability, while protecting the most vulnerable.
- Supply-side reforms to remove structural bottlenecks, build human capital, and strengthen climate resilience remain priorities for stronger medium-term growth.
Washington, D.C.: An International Monetary Fund (IMF) mission team, led by Ms. Piyaporn Sodsriwiboon, visited Malé during June 4–14, 2026, to discuss recent economic developments, the outlook, and the country’s policy priorities in the context of the 2026 Article IV consultation.
At the end of the mission, Ms. Sodsriwiboon issued the following statement:
“Over the past year, the Maldivian economy has navigated a challenging macroeconomic and financial environment with improved resilience. A sizable fiscal consolidation effort through both revenue mobilization and expenditure controls was undertaken in 2025, which helped contain financing pressures. Economic activity remained robust, supported by strong growth in tourism amid buoyant external demand. This, together with official bilateral support received, somewhat mitigated near-term external pressures and facilitated an increase in international reserves.
“Despite elevated vulnerabilities, the authorities have continued to meet their debt obligations, including timely repayments of sukuk bonds and loans from both official and private creditors. The financial system has been stable. Nevertheless, sovereign–bank nexus remains elevated, which, in combination with other economic and policy settings, could pose macro-financial risks and constrain productive investment and growth.
“Amid high uncertainty, spillovers from the Middle East conflict have weighed significantly on the Maldives’ near-term outlook. Weaker tourism activity and higher global energy prices would slow real GDP growth to about 1 percent in 2026. Beyond 2026, growth is projected to recover in 2027 and would return to its potential of around 4 percent over the medium term. Downside risks dominate, while external risks also remain salient. The recent debt repayments alleviated immediate solvency concerns, although the overall fiscal deficit and public debt are projected to stay elevated and the risk of overall and external debt distress remains high. Driven by higher import bills, the current account deficit would also widen further.
“Near-term policy priority would be to recalibrate the policy mix to sustainably address macroeconomic imbalances, put debt on a downward trajectory, and maintain financial stability, while protecting the most vulnerable.
“Restoring fiscal and debt sustainability would require credible, reform-based consolidation that restrains spending—building on the efforts to streamline capital spending in 2025—and strengthens revenue mobilization. Given the surge in global oil prices amid the Middle East conflict, a systematic expenditure review of subsidy schemes will be essential to streamline costs and target vulnerable groups, guided by proxy means testing and strengthened administrative capacity and delivery systems. The ongoing reforms to improve energy efficiency and transition to renewable energy would also help reduce future subsidy costs. State-owned enterprises remain a material source of fiscal and governance risk, warranting stronger oversight and control. Enhancing the public financial framework remains crucial to improve fiscal policy credibility and effectiveness.
“The Maldives Monetary Authority (MMA) has taken a welcome step to resume open market operations, which should be continued to tighten monetary conditions. While the Foreign Currency Act has helped alleviate foreign exchange liquidity pressures and build international reserves, decisive macroeconomic adjustments are key to preserving the exchange rate peg and restoring stability. Vigilant oversight of the financial sector remains essential. Strengthening banking supervision and crisis management frameworks through upgrading central bank and financial sector laws and regulations would be crucial to enhancing financial stability and policy credibility.
“Over the longer term, supply-side reforms to remove structural bottlenecks to growth, strengthen human capital and improve climate resilience are priorities. Free trade and financial agreements with key bilateral partners have been steadily advanced, which would help diversify sources of external demand. Improving legal framework and governance is crucial to enhance the business climate and foster private sector development. Integrating climate sensitivity into public financial and investment management processes would be essential for enhancing climate investments and unlocking concessional climate financing.
“The IMF team would like to thank the Maldivian authorities for their hospitality and constructive discussions. Meetings were held with Finance Minister H. Zareer, Governor A. Munawar, and other senior officials, as well as representatives from the private sector and development partners.”
read more: https://www.imf.org/en/news/articles/2026/06/16/pr-26208-maldives-imf-staff-completes-2026-article-iv-mission
