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International Monetary Fund

This paper examines the Maldives’ 2009 Article IV Consultation on economic developments and policies. The Maldivian economy is facing large external and fiscal imbalances, resulting from the severe impact of the global financial crisis and exacerbated by an unsustainable fiscal expansion. The global crisis has led to sharp declines in tourism and related investment, other net capital flows, and exports. This has caused a significant fall in fiscal revenue, compounding a large increase in public spending, and pushed the economy into recession. A rising share of the resulting fiscal deficit has been financed by monetization.

International Monetary Fund
The first review of Maldives’ economic performance under the Stand-By Arrangement (SBA) and the Arrangement under the Exogenous Shocks Facility is discussed. The fiscal deficit in 2009 was estimated at 26¼ percent of GDP, 2½ percentage points lower than previously projected. The growth of monetary aggregates slowed down in line with projections. A key risk concerns the ability of the government to maintain the public sector wage cuts. A negative outcome on this would have a large fiscal impact.
International Monetary Fund
The financial sector of the Maldives, although small and not developed, is susceptible to both money laundering and, to a lesser extent, terrorist financing. This report focuses on observance of standards and codes for the FATF-40 (Financial Action Task Force) recommendations for antimoney laundering (AML) and nine special recommendations on combating the financing of terrorism (CFT) in the Maldives. It provides a summary of the AML/CFT measures in place in the Maldives and contains recommendations on how the AML/CFT system could be strengthened.
International Monetary Fund. Asia and Pacific Dept
This 2017 Article IV Consultation highlights that Maldives’ economy grew by 3.9 percent in 2016 and continues to improve in 2017 on a recovery in tourism and a continued strength in construction. The fiscal deficit widened in 2016 driven by lower-than-expected revenue and large arrears clearance despite unchanged current spending. Public debt as a share of GDP rose nearly 11.5 percentage points from 2014–16. The outlook is for a strengthening recovery in the near term, with low inflation, loose financial conditions, but with significant downside risks from a fragile fiscal and external position. Growth is projected to recover in 2017 and stabilize over the medium term.
International Monetary Fund
The Maldives has taken steps to lay down the foundations of an antimoney laundering and counterterrorist financing (AML/CFT) framework. This report summarizes the AML/CFT measures that were in place in the Maldives at the time of the onsite visit (October 17–28, 2010) and shortly thereafter. The report describes and analyzes these measures and offers recommendations on how to strengthen certain aspects of the AML/CFT system. It also assesses the Maldives’ level of compliance with the Recommendations of the Financial Action Task Force (FATF).
International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation discusses that growth in Maldives has been strong and is projected to remain so in 2019 driven by tourism, commerce, and construction. Nonetheless, the Maldives remains highly vulnerable with reduced policy space due to large and growing public debt and rising pressures on external stability. The consultation focused on addressing external imbalances including offering advice on restoring fiscal buffers, strengthening public finance management, reforming the exchange rate regime, building international reserves, improving governance, implementing structural reforms, and encouraging diversification. The outlook is for continued strong growth and moderate inflation, and only a gradual improvement in fiscal and current account deficits. As major infrastructure projects will gradually start to unwind, the current account deficit will begin to narrow. Under the current policies, the fiscal deficit is projected to remain elevated. However, successful implementation of tax reforms and improved tax administration, together with measures to contain budgetary spending, would result in a narrowing of both fiscal and current account deficits and mitigate the risks posed by high and rising public and external debt.
International Monetary Fund
This paper examines the Maldives’ 2009 Article IV Consultation on economic developments and policies. The Maldivian economy is facing large external and fiscal imbalances, resulting from the severe impact of the global financial crisis and exacerbated by an unsustainable fiscal expansion. The global crisis has led to sharp declines in tourism and related investment, other net capital flows, and exports. This has caused a significant fall in fiscal revenue, compounding a large increase in public spending, and pushed the economy into recession. A rising share of the resulting fiscal deficit has been financed by monetization.
International Monetary Fund. Asia and Pacific Dept
This 2005 Article IV Consultation with Maldives discusses 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 by 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. The main challenge for Maldives is to ensure that favorable growth prospects are not undermined by fiscal excesses and consequent macroeconomic instability. The IMF staff urged the authorities to prioritize expenditures in line with more realistic revenue estimates, so as to achieve the stated objective of zero domestic financing of the budget. There has been a recent increase in debt ratios due to construction of new resorts and the government’s ambitious infrastructure program. 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.
Mr. Alexander Massara and André Mialou
This paper leverages the IMF’s Financial Access Survey (FAS) database to construct a new composite index of financial inclusion. The topic of financial inclusion has gathered significant attention in recent years. Various initiatives have been undertaken by central banks both in advanced and developing countries to promote financial inclusion. The issue has also attracted increasing interest from the international community with the G-20, IMF, and World Bank Group assuming an active role in developing and collecting financial inclusion data and promoting best practices to improve financial inclusion. There is general recognition among policy makers that financial inclusion plays a significant role in sustaining employment, economic growth, and financial stability. Nonetheless, the issue of its robust measurement is still outstanding. The new composite index uses factor analysis to derive a weighting methodology whose absence has been the most persistent of the criticisms of previous indices. Countries are then ranked based on the new composite index, providing an additional analytical tool which could be used for surveillance and policy purposes on a regular basis.
International Monetary Fund

This paper examines the Maldives’ 2009 Article IV Consultation on economic developments and policies. The Maldivian economy is facing large external and fiscal imbalances, resulting from the severe impact of the global financial crisis and exacerbated by an unsustainable fiscal expansion. The global crisis has led to sharp declines in tourism and related investment, other net capital flows, and exports. This has caused a significant fall in fiscal revenue, compounding a large increase in public spending, and pushed the economy into recession. A rising share of the resulting fiscal deficit has been financed by monetization.