## Maldives: 2007 Article IV Consultation-Public Information Notice; Staff Report; and Statement by the Executive Director for Maldives

_IMF Staff Country Reports, September 3, 2019_

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**Canonical URL:** [Maldives: 2007 Article IV Consultation-Public Information Notice; Staff Report; and Statement by the Executive Director for Maldives](https://www.imf.org/en/publications/cr/issues/2019/09/03/maldives-2007-article-iv-consultation-public-information-notice-staff-report-and-statement-48639)

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## Bibliographic details
- Published: September 3, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513512464.002

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### Growth and macroeconomic developments
- The 2005 Article IV Consultation finds that Maldives has rebounded strongly from the tsunami of late 2004.
- Gross domestic product has grown rapidly, underpinned by:
  - a robust increase in tourist arrivals, and
  - construction activity pertaining to the development of new resorts.
- Inflation remains low although it is on a rising trend.
- The exchange rate peg continues to serve the country well.

### Fiscal position and public debt
- The main challenge is to ensure favorable growth prospects are not undermined by fiscal excesses and consequent macroeconomic instability.
- There has been a recent increase in debt ratios due to:
  - construction of new resorts, and
  - the government’s ambitious infrastructure program.
- IMF staff urged the authorities to prioritize expenditures in line with more realistic revenue estimates to achieve the stated objective of zero domestic financing of the budget.

### Institutional and central bank reform
- The new central bank act has:
  - separated the positions of finance minister and governor of the central bank, and
  - reorganized the governing body of the central bank.
- Going forward it will be important to entrench central bank independence.

### Key points and recommendations
- Maintain the exchange rate peg as it continues to serve the country well.
- Prioritize expenditures and align them with more realistic revenue estimates.
- Pursue measures to avoid fiscal excesses that could lead to macroeconomic instability.
- Monitor and manage rising debt ratios associated with resort construction and infrastructure.
- Strengthen and entrench central bank independence following the new central bank act.

*Maldives: 2007 Article IV Consultation-Public Information Notice; Staff Report; and Statement by the Executive Director for Maldives*

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_Source: https://www.imf.org/en/publications/cr/issues/2019/09/03/maldives-2007-article-iv-consultation-public-information-notice-staff-report-and-statement-48639_