Abstract
This 2014 Article IV Consultation highlights that Maldives’ real economy has picked up. Growth is estimated to have reached 5 percent in 2014 with stronger tourism activity driven by a rapid expansion from Asian markets and a tepid recovery from Europe. The IMF staff expects growth to be about 5 percent in 2015. Weaker import prices have pushed down inflation to low levels. Growth is expected to remain relatively strong in the near term, though the fiscal adjustment envisaged in the 2015 Budget will have a mildly negative effect on growth.
Recent Debt Developments
Total public debt has risen rapidly since the 2004 tsunami from around 36 percent of GDP in 2004 to 74.6 percent of GDP in 2014, excluding domestic arrears, above the 60 percent limit in the Fiscal Responsibility Law (Figure 2 and Table 3).1,2 The increase initially reflected additional expenditure needs in the aftermath of the tsunami but more recently additional recurrent spending on wages, social welfare, and subsidies. Under the baseline scenario, public debt would remain on a rising path over the medium term.
Public debt is held mainly by domestic banks, the Maldives Monetary Authority (MMA) and official multilateral and bilateral creditors (text figure).
The economy has relied heavily on the issuance of treasury bills and monetization as well as external borrowing to finance deficits. There has also been a buildup in domestic arrears which are estimated at 6.3 percent of GDP in 2013. The DSA baseline assumes the authorities clear these arrears going forward over a period of five years.
Public Debt Holdings by Sector
(Percent distribution)
Citation: IMF Staff Country Reports 2015, 068; 10.5089/9781498381611.002.A003
The stock of external debt is substantially lower than previously projected but has been on a rising trajectory. Between 2011 and 2013, net repayments of external public and publicly guaranteed external debt and revised data for the private external debt have reduced the estimated level of external debt in 2013 from 98 percent of GDP projected in the 2013 debt sustainability analysis to 32 percent of GDP; PPG external debt is now estimated at 27.6 percent in 2013 down from 44 percent of GDP in the 2013 DSA. Private external debt is now estimated to be just 5 percent of GDP in 2013 substantially lower than the projection of 53 percent in the previous DSA—this reflects revisions to the external accounts which have also reduced the scale of the current account deficit and lower net flows than projected in the past two years. However, these data are still estimates and remain uncertain. With an open capital account and little reporting private sector external debt data are subject to large errors and there are likely to be further revisions to debt estimates.
Taken together private external debt and total public debt are estimated at about $ 1.8 bn (67 percent of GDP) in 2013.
Macroeconomic Assumptions
The macroeconomic assumptions underlying this DSA have been updated based on developments in 2013 and 2014. At the time of the IMF’s 2013 Article IV consultation, official data pointed to very large current account and fiscal deficits. Two years on, the picture is somewhat different: a recovery in tourism is supporting real growth and Maldives is performing well compared to peers; substantial data revisions paint a less worrying picture of the current account (with deficits of 10.6 percent of GDP in 2012 and 6.5 percent of GDP in 2013); external debt estimates are lower; and while the large fiscal deficit has continued to widen following increases in recurrent spending, measures in the 2015 Budget and earlier increases in taxes, including the Tourism Goods and Services Tax (TGST) should help to rein in the deficit. The primary deficit is therefore projected to narrow–but not sufficiently to bring debt ratios down.
Consistent with these developments, the main changes in the macroeconomic assumptions in the 2014 DSA compared to those contained in the IMF’s 2013 Article IV Staff Report are: (i) a lower non-interest current account deficit; (ii) a smaller but still sizeable primary deficit; (iii) a lower starting point for external debt; and (iv) a somewhat stronger growth path (accompanied by slightly higher FDI) reflecting a stronger tourism performance and a somewhat lower probability attached to a twin deficit crisis (which would hit confidence and permanently damage growth prospects).
The baseline scenario is built on current policies, including the Authorities 2015 Budget measures. This includes the green tax on tourism (replacing the bednights tax), increases in import duties, better targeting of subsidies, and a public employment freeze. The baseline does not include estimates for revenues from the Special Economic Zones (SEZs). It also does not include any compensation amount from the arbitration ruling over the airport concession.3
Debt SustainabilityAnalysis: Macroeconomic Assumptions 2014–2034
Debt SustainabilityAnalysis: Macroeconomic Assumptions 2014–2034
| IMF 2013 and 2014 Article IV Reports | ||
|---|---|---|
| 2013 | 2014 | |
| (Annual percentage change) | ||
| Real growth | 4.1 | 4.5 |
| Inflation | 4.6 | 3.5 |
| (In percent of GDP) | ||
| Current Account (non interest) | 25.5 | 4 |
| FDI | 8.4 | 8.6 |
| Primary Deficit | 8.9 | 2.4 |
Debt SustainabilityAnalysis: Macroeconomic Assumptions 2014–2034
| IMF 2013 and 2014 Article IV Reports | ||
|---|---|---|
| 2013 | 2014 | |
| (Annual percentage change) | ||
| Real growth | 4.1 | 4.5 |
| Inflation | 4.6 | 3.5 |
| (In percent of GDP) | ||
| Current Account (non interest) | 25.5 | 4 |
| FDI | 8.4 | 8.6 |
| Primary Deficit | 8.9 | 2.4 |
Key assumptions: Overall, the baseline macroeconomic assumptions are a little stronger than the previous DSA.4 The baseline macro scenario includes significant fiscal adjustment but the primary balance does not improve sufficiently to prevent a rising debt profile.
Real GDP growth. Fiscal adjustment has a mild negative effect on growth in the short run, slowing to 4–4¼ percent in 2016–17 and averages 4.5 percent over 2020–34 a slower pace than the average of the past ten years (around 6.5 percent) which included the initial rapid development of the tourism sector; estimates of potential output growth (are around 5 percent).5 The tourism sector initially continues to experience a recovery driven by expansion from new markets (especially China) and a gradual pick up in core markets. New resorts are likely to be developed and the development of the airport could substantially add to capacity, sustaining growth into the medium term.6
Inflation. GDP deflator inflation remains low over the next two years reflecting lower oil prices and generally weaker global commodity prices partly offset by higher import duties and then rises to around 3.5 percent—close to its long run average.
The current account. Substantial data revisions have reduced current account deficit compared to the previous DSA.7 The non interest current account deficit narrows in 2015 to 3.7 percent of GDP with lower oil prices and narrows a little to 3.4 percent of GDP in 2019 with improving tourist receipts and some restraint on import demand from the authorities’ planned fiscal adjustment. Thereafter the current account deficit widens a little. Reserves levels strengthen by 2019.
The fiscal deficit. The primary deficit (under the baseline), improves by 3.7 percentage points in 2015 significantly boosted by the temporary impact of bringing forward the timing of extension of resort licenses; and in 2016 revenues strengthen with the full year effect of higher import duties and the imposition of the green tax. Further consolidation is expected thereafter from gradual expenditure restraint, lowering the primary deficit to around 2.4 percent of GDP. But this is less than the stabilizing primary deficit (0.8 percent of GDP) and public debt ratios still continue to drift upwards—reaching 104 percent of GDP in 2034.
Financing. In the recent past, the bulk of the deficit financing has been met from domestic sources, in particular through the domestic banking system and the pension fund. Interest rates had risen sharply in the primary market for T-bills in 2012 and 2013. But, from mid 2014 the government has replaced the auction system with a ‘tap system’ (of fixed interest rates) which lowered interest costs by about 200bp on average across maturities. This temporarily stabilized interest cost on domestic debt. And thus far demand for T-bills has been sustained by the banking sector, against a backdrop of weak lending conditions (with banks reluctant to lend to sectors where NPLs built up during the crisis). However if debt rises, lower yields may not be sustained and with global interest rates expected to rise, Maldives yields are assumed to remain high over the forecast period. In the debt sustainability analysis it is assumed that the bulk of financing is sourced domestically.8 However, as the debt ratio rises this may not be sustainable—and raising external financing may become difficult.
Non debt creating financial flows. With limited lending opportunities, Maldives banks have paid down debt and increased assets abroad since the global financial crisis, leading to a steady financial account outflow (of around 4 percent of GDP). These outflows are expected to continue and contribute to the residual in the external DSA.
External and Public Debt Sustainability
External debt sustainability. Under the baseline scenario, with a smaller current account deficit to be financed, the present value of external debt falls back a little to 26.7 percent of GDP and the external burden remains comfortably below the thresholds. However, the improvement is in part because it is assumed that the authorities continue to finance public debt predominantly from domestic sources—a shift in financing mix towards greater external borrowing is an upside risk to the external DSA. Furthermore, the external debt path is vulnerable to export shocks, a combined shock to exports, GDP growth, US dollar GDP deflator and non-debt creating flows, and a scenario where data reverts to historical averages (of a larger current account deficit and slightly weaker growth). In the historical averages scenario two thresholds would be breached, and a third rises close to the threshold.
Public debt sustainability. Public debt is already at a very high level and, even if the measures in the 2015 Budget are effectively implemented, debt ratios continue to rise and are in breach of the benchmark. Under the baseline, the PV of public debt rises from 70 percent of GDP in 2014 to 99 percent of GDP in 2034. Domestic debt is also highly vulnerable to shocks to the primary balance and to growth (and there are downside risks to non tourism activity for example if domestic arrears continue to build). Shocks to public debt or fiscal slippage or a lower growth trajectory than expected easily push debt onto an unsustainable path.
Assessment
Current policies still lead to rising public debt levels and further adjustment is needed to build buffers and reduce the risk of public debt distress. The DSA therefore points to the need for additional fiscal consolidation measures in the near term.
IMF staff’s view is that further fiscal measures are needed to firmly place debt on a downward path and this should entail better expenditure control and public financial management reforms. Staff would recommend a further fiscal adjustment effort of around 3 percent of GDP over five years. This could be accomplished through greater expenditure restraint, focusing on control of the wage bill, containing rising healthcare costs, and finding savings on transport and communications. A further rise in the TGST rate from 12 to 15 percent would also help to underpin revenues. Such an adjustment path would help to stabilize debt by 2016 and then begin to bring the debt ratio down (see text figure).
Public Debt: Baseline vs. Adjustment Scenarios, 2010–2019
(In percent of GDP)
Citation: IMF Staff Country Reports 2015, 068; 10.5089/9781498381611.002.A003
Sources: Maldives authorities; and IMF staff estimates.Even with a sustained fiscal consolidation effort, Maldives has a high level of public debt and would remain vulnerable for a number of years. A deterioration of public finances, or external shocks to tourism earnings and foreign direct investment, or a dent to confidence against a backdrop of rising fiscal pressure are all important risks.
External risk rating. Overall, Maldives is judged to face a moderate risk of external debt distress, based on an assessment of public external debt, but a heightened overall risk of debt distress, reflecting the significant and high vulnerabilities related to domestic debt. In addition, as public debt rises there is a risk that domestic financing sources become sated and financing has to be sought from external sources, thus worsening the external debt outlook. The lowering of the risk rating from high to moderate largely reflects data revisions and the much lower private external debt stock in the current DSA compared to projections of the previous DSA—there were significant net repayments of private external debt during 2011–13.
Authorities’ Views
The authorities were of the view that the measures in the 2015 Budget would deliver bigger savings and larger revenue increases than projected by staff (especially related to revenues from the acquisition of SEZs and resort licenses). They expected the public employment freeze would generate substantial savings on the wage bill. They expected these to be sufficient to bring debt ratios down without the need for further revenue raising or other measures. Nonetheless, they concurred with the external risk rating, though they judged the risks from the shock scenarios to be lower than assessed by staff.
Maldives Baseline Scenario: Indicators of Public and Publicly Guaranteed External Debt Under Alternative Scenarios, 2014–2034 1/
Citation: IMF Staff Country Reports 2015, 068; 10.5089/9781498381611.002.A003
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2024. In figure b. it corresponds to a Exports shock; in c. to a Exports shock; in d. to a Exports shock; in e. to a Exports shock and in figure f. to a Exports shockMaldives Baseline Scenario: Indicators of Public Debt Under Alternative
Scenarios, 2014–2034 1/
Citation: IMF Staff Country Reports 2015, 068; 10.5089/9781498381611.002.A003
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2024.2/ Revenues are defined inclusive of grants.Maldives: External Debt Sustainability Framework, Baseline Scenario, 2011–34 1/
(In percent of GDP, unless otherwise indicated)
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets (for Maldives bank placements abroad 4 percent of GDP); and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the 6 years– the years surrounding the 2004 Tsunami are excluded as it is a one off exceptional event.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Maldives: External Debt Sustainability Framework, Baseline Scenario, 2011–34 1/
(In percent of GDP, unless otherwise indicated)
| Actual | Historical 6/ Average | Standard 6/ Deviation | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2014-2019 Average | 2024 | 2034 | 2020-2034 Average | |||||||
| External debt (nominal) 1/ | 42.6 | 34.3 | 32.2 | 34.3 | 33.8 | 33.6 | 32.8 | 32.0 | 31.0 | 31.2 | 32.0 | ||||||||
| of which: public and publicly guaranteed (PPG) | 29.6 | 28.5 | 27.6 | 27.7 | 27.6 | 27.5 | 26.9 | 26.4 | 25.7 | 26.9 | 28.5 | ||||||||
| Change in external debt | -2.7 | -8.3 | -2.2 | 2.1 | -0.5 | -0.2 | -0.8 | -0.8 | -1.0 | 0.3 | -0.1 | ||||||||
| Identified net debt-creating flows | 0.0 | -1.8 | -8.9 | -6.4 | -10.3 | -8.8 | -9.0 | -8.8 | -8.2 | -6.0 | -3.0 | ||||||||
| Non-interest current account deficit | 16.8 | 9.7 | 5.9 | 14.0 | 7.3 | 7.4 | 3.7 | 4.8 | 4.2 | 3.8 | 3.4 | 3.6 | 5.0 | 4.0 | |||||
| Deficit in balance of goods and services | -5.5 | -10.6 | -17.8 | -17.1 | -21.7 | -19.9 | -20.3 | -20.8 | -21.1 | -20.7 | -17.8 | ||||||||
| Exports | 104.4 | 95.5 | 105.0 | 110.1 | 109.8 | 109.2 | 109.6 | 110.2 | 110.3 | 109.5 | 106.6 | ||||||||
| Imports | 98.9 | 84.9 | 87.3 | 93.0 | 88.1 | 89.2 | 89.3 | 89.4 | 89.1 | 88.8 | 88.8 | ||||||||
| Net current transfers (negative = inflow) | 10.4 | 10.2 | 10.6 | 5.8 | 7.4 | 10.9 | 11.5 | 11.3 | 11.3 | 11.4 | 11.4 | 11.5 | 11.5 | 11.5 | |||||
| of which: official | -2.0 | -0.9 | -0.3 | -1.4 | -1.0 | -0.6 | -0.5 | -0.4 | -0.4 | -0.3 | -0.1 | ||||||||
| Other current account flows (negative = net inflow) | 11.9 | 10.1 | 13.0 | 13.6 | 13.9 | 13.5 | 13.2 | 13.2 | 13.1 | 12.7 | 11.4 | ||||||||
| Net FDI (negative = inflow) | -18.2 | -9.0 | -13.4 | -8.7 | 4.3 | -13.3 | -13.7 | -13.8 | -13.3 | -12.6 | -11.6 | -9.3 | -7.8 | -8.6 | |||||
| Endogenous debt dynamics 2/ | 1.4 | -2.5 | -1.4 | -0.5 | -0.2 | 0.1 | 0.1 | 0.0 | 0.0 | -0.3 | -0.3 | ||||||||
| Contribution from nominal interest rate | 1.3 | 0.9 | 0.7 | 1.1 | 1.4 | 1.4 | 1.4 | 1.4 | 1.3 | 1.0 | 1.0 | ||||||||
| Contribution from real GDP growth | -2.9 | -0.5 | -1.5 | -1.5 | -1.6 | -1.2 | -1.3 | -1.3 | -1.4 | -1.3 | -1.3 | ||||||||
| Contribution from price and exchange rate changes | 2.9 | -2.9 | -0.6 | … | … | … | … | … | … | … | … | … | … | ||||||
| Residual (3–4) 3/ | -2.7 | -6.5 | 6.8 | 8.5 | 9.8 | 8.6 | 8.2 | 7.9 | 7.3 | 6.3 | 3.0 | ||||||||
| of which: exceptional financing | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| PV of external debt 4/ | … | … | 30.8 | 32.9 | 32.0 | 31.3 | 30.0 | 28.7 | 27.4 | 26.5 | 26.7 | ||||||||
| In percent of exports | … | … | 29.4 | 29.9 | 29.1 | 28.6 | 27.4 | 26.1 | 24.8 | 24.2 | 25.0 | ||||||||
| PV of PPG external debt | … | … | 26.2 | 26.3 | 25.7 | 25.2 | 24.1 | 23.1 | 22.0 | 22.2 | 23.1 | ||||||||
| In percent of exports | … | … | 25.0 | 23.9 | 23.4 | 23.1 | 22.0 | 20.9 | 19.9 | 20.3 | 21.7 | ||||||||
| In percent of government revenues | … | … | 92.6 | 83.6 | 74.5 | 71.3 | 69.0 | 66.3 | 63.7 | 64.1 | 66.5 | ||||||||
| Debt service-to-exports ratio (in percent) | 8.9 | 8.7 | 7.2 | 6.2 | 7.2 | 6.7 | 6.5 | 5.7 | 5.4 | 3.8 | 3.7 | ||||||||
| PPG debt service-to-exports ratio (in percent) | 3.1 | 3.1 | 2.8 | 2.6 | 3.1 | 3.0 | 2.9 | 2.9 | 2.7 | 1.9 | 2.4 | ||||||||
| PPG debt service-to-revenue ratio (in percent) | 12.7 | 11.8 | 10.5 | 9.2 | 9.7 | 9.2 | 9.1 | 9.1 | 8.8 | 5.9 | 7.4 | ||||||||
| Total gross financing need (Millions of U.S. dollars) | 337.5 | 334.2 | 52.7 | 65.8 | -3.0 | 9.9 | -3.9 | -29.1 | -29.6 | -17.0 | 298.3 | ||||||||
| Non-interest current account deficit that stabilizes debt ratio | 19.5 | 18.0 | 8.0 | 5.3 | 4.1 | 5.0 | 5.1 | 4.6 | 4.3 | 3.2 | 5.1 | ||||||||
| Key macroeconomic assumptions | |||||||||||||||||||
| Real GDP growth (in percent) | 6.5 | 1.3 | 4.7 | 6.2 | 8.3 | 5.0 | 5.0 | 3.9 | 4.2 | 4.4 | 4.6 | 4.5 | 4.5 | 4.4 | 4.5 | ||||
| GDP deflator in US dollar terms (change in percent) | -6.1 | 7.2 | 1.8 | 3.9 | 4.8 | 0.7 | 1.5 | 3.0 | 4.1 | 4.2 | 4.1 | 2.9 | 3.5 | 3.5 | 3.5 | ||||
| Effective interest rate (percent) 5/ | 3.0 | 2.4 | 2.1 | 3.5 | 1.7 | 3.5 | 4.2 | 4.4 | 4.5 | 4.5 | 4.5 | 4.3 | 3.6 | 3.4 | 3.6 | ||||
| Growth of exports of G&S (US dollar terms, in percent) | 21.0 | -0.6 | 17.1 | 8.5 | 13.1 | 10.9 | 6.3 | 6.4 | 8.9 | 9.3 | 9.1 | 8.5 | 7.8 | 7.8 | 8.0 | ||||
| Growth of imports of G&S (US dollar terms, in percent) | 36.4 | -6.7 | 9.5 | 8.5 | 23.4 | 12.7 | 0.9 | 8.5 | 8.5 | 8.9 | 8.6 | 8.0 | 8.1 | 8.1 | 8.2 | ||||
| Grant element of new public sector borrowing (in percent) | … | … | … | … | … | 19.0 | 20.4 | 20.4 | 20.4 | 20.4 | 20.4 | 20.2 | 18.8 | 18.5 | 18.9 | ||||
| Government revenues (excluding grants, in percent of GDP) | 25.5 | 25.1 | 28.3 | 31.4 | 34.6 | 35.3 | 34.9 | 34.8 | 34.5 | 34.7 | 34.8 | 34.7 | |||||||
| Aid flows (in Millions of US dollars) 7/ | 88.0 | 51.9 | -14.2 | 26.9 | 24.8 | 29.8 | 26.7 | 27.4 | 29.4 | 29.8 | 41.3 | ||||||||
| of which: Grants | 47.5 | 23.9 | 7.6 | 26.9 | 22.1 | 19.4 | 16.3 | 16.0 | 17.8 | 17.8 | 17.8 | ||||||||
| of which: Concessional loans | 40.5 | 28.1 | -21.8 | 0.0 | 2.7 | 10.3 | 10.4 | 11.4 | 11.6 | 12.0 | 23.5 | ||||||||
| Grant-equivalent financing (in percent of GDP) 8/ | … | … | … | 1.7 | 1.5 | 1.4 | 1.2 | 1.2 | 1.1 | 1.0 | 0.8 | 1.0 | |||||||
| Grant-equivalent financing (in percent of external financing) 8/ | … | … | … | 35.2 | 32.5 | 30.8 | 29.3 | 28.3 | 29.0 | 24.4 | 21.2 | 23.6 | |||||||
| Memorandum items: | |||||||||||||||||||
| Nominal GDP (Millions of US dollars) | 2332 | 2534 | 2699 | 2855 | 3043 | 3258 | 3534 | 3843 | 4188 | 6267 | 13664 | ||||||||
| Nominal dollar GDP growth | 0.0 | 8.7 | 6.5 | 5.8 | 6.6 | 7.1 | 8.5 | 8.7 | 9.0 | 7.6 | 8.1 | 8.1 | 8.2 | ||||||
| PV of PPG external debt (in Millions of US dollars) | 708.2 | 750.5 | 783.4 | 819.9 | 852.0 | 886.9 | 920.8 | 1392.2 | 3162.7 | ||||||||||
| (PVt-PVt-1)/GDPt-1 (in percent) | 1.6 | 1.2 | 1.2 | 1.0 | 1.0 | 0.9 | 1.1 | 2.2 | 1.8 | 1.9 | |||||||||
| Gross workers’ remittances (Millions of US dollars) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| PV of PPG external debt (in percent of GDP + remittances) | … | … | 26.2 | 26.3 | 25.7 | 25.2 | 24.1 | 23.1 | 22.0 | 22.2 | 23.1 | ||||||||
| PV of PPG external debt (in percent of exports + remittances) | … | … | 25.0 | 23.9 | 23.4 | 23.1 | 22.0 | 20.9 | 19.9 | 20.3 | 21.7 | ||||||||
| Debt service of PPG external debt (in percent of exports + remittances) | … | … | 2.8 | 2.6 | 3.1 | 3.0 | 2.9 | 2.9 | 2.7 | 1.9 | 2.4 | ||||||||
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets (for Maldives bank placements abroad 4 percent of GDP); and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the 6 years– the years surrounding the 2004 Tsunami are excluded as it is a one off exceptional event.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Maldives: External Debt Sustainability Framework, Baseline Scenario, 2011–34 1/
(In percent of GDP, unless otherwise indicated)
| Actual | Historical 6/ Average | Standard 6/ Deviation | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2014-2019 Average | 2024 | 2034 | 2020-2034 Average | |||||||
| External debt (nominal) 1/ | 42.6 | 34.3 | 32.2 | 34.3 | 33.8 | 33.6 | 32.8 | 32.0 | 31.0 | 31.2 | 32.0 | ||||||||
| of which: public and publicly guaranteed (PPG) | 29.6 | 28.5 | 27.6 | 27.7 | 27.6 | 27.5 | 26.9 | 26.4 | 25.7 | 26.9 | 28.5 | ||||||||
| Change in external debt | -2.7 | -8.3 | -2.2 | 2.1 | -0.5 | -0.2 | -0.8 | -0.8 | -1.0 | 0.3 | -0.1 | ||||||||
| Identified net debt-creating flows | 0.0 | -1.8 | -8.9 | -6.4 | -10.3 | -8.8 | -9.0 | -8.8 | -8.2 | -6.0 | -3.0 | ||||||||
| Non-interest current account deficit | 16.8 | 9.7 | 5.9 | 14.0 | 7.3 | 7.4 | 3.7 | 4.8 | 4.2 | 3.8 | 3.4 | 3.6 | 5.0 | 4.0 | |||||
| Deficit in balance of goods and services | -5.5 | -10.6 | -17.8 | -17.1 | -21.7 | -19.9 | -20.3 | -20.8 | -21.1 | -20.7 | -17.8 | ||||||||
| Exports | 104.4 | 95.5 | 105.0 | 110.1 | 109.8 | 109.2 | 109.6 | 110.2 | 110.3 | 109.5 | 106.6 | ||||||||
| Imports | 98.9 | 84.9 | 87.3 | 93.0 | 88.1 | 89.2 | 89.3 | 89.4 | 89.1 | 88.8 | 88.8 | ||||||||
| Net current transfers (negative = inflow) | 10.4 | 10.2 | 10.6 | 5.8 | 7.4 | 10.9 | 11.5 | 11.3 | 11.3 | 11.4 | 11.4 | 11.5 | 11.5 | 11.5 | |||||
| of which: official | -2.0 | -0.9 | -0.3 | -1.4 | -1.0 | -0.6 | -0.5 | -0.4 | -0.4 | -0.3 | -0.1 | ||||||||
| Other current account flows (negative = net inflow) | 11.9 | 10.1 | 13.0 | 13.6 | 13.9 | 13.5 | 13.2 | 13.2 | 13.1 | 12.7 | 11.4 | ||||||||
| Net FDI (negative = inflow) | -18.2 | -9.0 | -13.4 | -8.7 | 4.3 | -13.3 | -13.7 | -13.8 | -13.3 | -12.6 | -11.6 | -9.3 | -7.8 | -8.6 | |||||
| Endogenous debt dynamics 2/ | 1.4 | -2.5 | -1.4 | -0.5 | -0.2 | 0.1 | 0.1 | 0.0 | 0.0 | -0.3 | -0.3 | ||||||||
| Contribution from nominal interest rate | 1.3 | 0.9 | 0.7 | 1.1 | 1.4 | 1.4 | 1.4 | 1.4 | 1.3 | 1.0 | 1.0 | ||||||||
| Contribution from real GDP growth | -2.9 | -0.5 | -1.5 | -1.5 | -1.6 | -1.2 | -1.3 | -1.3 | -1.4 | -1.3 | -1.3 | ||||||||
| Contribution from price and exchange rate changes | 2.9 | -2.9 | -0.6 | … | … | … | … | … | … | … | … | … | … | ||||||
| Residual (3–4) 3/ | -2.7 | -6.5 | 6.8 | 8.5 | 9.8 | 8.6 | 8.2 | 7.9 | 7.3 | 6.3 | 3.0 | ||||||||
| of which: exceptional financing | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| PV of external debt 4/ | … | … | 30.8 | 32.9 | 32.0 | 31.3 | 30.0 | 28.7 | 27.4 | 26.5 | 26.7 | ||||||||
| In percent of exports | … | … | 29.4 | 29.9 | 29.1 | 28.6 | 27.4 | 26.1 | 24.8 | 24.2 | 25.0 | ||||||||
| PV of PPG external debt | … | … | 26.2 | 26.3 | 25.7 | 25.2 | 24.1 | 23.1 | 22.0 | 22.2 | 23.1 | ||||||||
| In percent of exports | … | … | 25.0 | 23.9 | 23.4 | 23.1 | 22.0 | 20.9 | 19.9 | 20.3 | 21.7 | ||||||||
| In percent of government revenues | … | … | 92.6 | 83.6 | 74.5 | 71.3 | 69.0 | 66.3 | 63.7 | 64.1 | 66.5 | ||||||||
| Debt service-to-exports ratio (in percent) | 8.9 | 8.7 | 7.2 | 6.2 | 7.2 | 6.7 | 6.5 | 5.7 | 5.4 | 3.8 | 3.7 | ||||||||
| PPG debt service-to-exports ratio (in percent) | 3.1 | 3.1 | 2.8 | 2.6 | 3.1 | 3.0 | 2.9 | 2.9 | 2.7 | 1.9 | 2.4 | ||||||||
| PPG debt service-to-revenue ratio (in percent) | 12.7 | 11.8 | 10.5 | 9.2 | 9.7 | 9.2 | 9.1 | 9.1 | 8.8 | 5.9 | 7.4 | ||||||||
| Total gross financing need (Millions of U.S. dollars) | 337.5 | 334.2 | 52.7 | 65.8 | -3.0 | 9.9 | -3.9 | -29.1 | -29.6 | -17.0 | 298.3 | ||||||||
| Non-interest current account deficit that stabilizes debt ratio | 19.5 | 18.0 | 8.0 | 5.3 | 4.1 | 5.0 | 5.1 | 4.6 | 4.3 | 3.2 | 5.1 | ||||||||
| Key macroeconomic assumptions | |||||||||||||||||||
| Real GDP growth (in percent) | 6.5 | 1.3 | 4.7 | 6.2 | 8.3 | 5.0 | 5.0 | 3.9 | 4.2 | 4.4 | 4.6 | 4.5 | 4.5 | 4.4 | 4.5 | ||||
| GDP deflator in US dollar terms (change in percent) | -6.1 | 7.2 | 1.8 | 3.9 | 4.8 | 0.7 | 1.5 | 3.0 | 4.1 | 4.2 | 4.1 | 2.9 | 3.5 | 3.5 | 3.5 | ||||
| Effective interest rate (percent) 5/ | 3.0 | 2.4 | 2.1 | 3.5 | 1.7 | 3.5 | 4.2 | 4.4 | 4.5 | 4.5 | 4.5 | 4.3 | 3.6 | 3.4 | 3.6 | ||||
| Growth of exports of G&S (US dollar terms, in percent) | 21.0 | -0.6 | 17.1 | 8.5 | 13.1 | 10.9 | 6.3 | 6.4 | 8.9 | 9.3 | 9.1 | 8.5 | 7.8 | 7.8 | 8.0 | ||||
| Growth of imports of G&S (US dollar terms, in percent) | 36.4 | -6.7 | 9.5 | 8.5 | 23.4 | 12.7 | 0.9 | 8.5 | 8.5 | 8.9 | 8.6 | 8.0 | 8.1 | 8.1 | 8.2 | ||||
| Grant element of new public sector borrowing (in percent) | … | … | … | … | … | 19.0 | 20.4 | 20.4 | 20.4 | 20.4 | 20.4 | 20.2 | 18.8 | 18.5 | 18.9 | ||||
| Government revenues (excluding grants, in percent of GDP) | 25.5 | 25.1 | 28.3 | 31.4 | 34.6 | 35.3 | 34.9 | 34.8 | 34.5 | 34.7 | 34.8 | 34.7 | |||||||
| Aid flows (in Millions of US dollars) 7/ | 88.0 | 51.9 | -14.2 | 26.9 | 24.8 | 29.8 | 26.7 | 27.4 | 29.4 | 29.8 | 41.3 | ||||||||
| of which: Grants | 47.5 | 23.9 | 7.6 | 26.9 | 22.1 | 19.4 | 16.3 | 16.0 | 17.8 | 17.8 | 17.8 | ||||||||
| of which: Concessional loans | 40.5 | 28.1 | -21.8 | 0.0 | 2.7 | 10.3 | 10.4 | 11.4 | 11.6 | 12.0 | 23.5 | ||||||||
| Grant-equivalent financing (in percent of GDP) 8/ | … | … | … | 1.7 | 1.5 | 1.4 | 1.2 | 1.2 | 1.1 | 1.0 | 0.8 | 1.0 | |||||||
| Grant-equivalent financing (in percent of external financing) 8/ | … | … | … | 35.2 | 32.5 | 30.8 | 29.3 | 28.3 | 29.0 | 24.4 | 21.2 | 23.6 | |||||||
| Memorandum items: | |||||||||||||||||||
| Nominal GDP (Millions of US dollars) | 2332 | 2534 | 2699 | 2855 | 3043 | 3258 | 3534 | 3843 | 4188 | 6267 | 13664 | ||||||||
| Nominal dollar GDP growth | 0.0 | 8.7 | 6.5 | 5.8 | 6.6 | 7.1 | 8.5 | 8.7 | 9.0 | 7.6 | 8.1 | 8.1 | 8.2 | ||||||
| PV of PPG external debt (in Millions of US dollars) | 708.2 | 750.5 | 783.4 | 819.9 | 852.0 | 886.9 | 920.8 | 1392.2 | 3162.7 | ||||||||||
| (PVt-PVt-1)/GDPt-1 (in percent) | 1.6 | 1.2 | 1.2 | 1.0 | 1.0 | 0.9 | 1.1 | 2.2 | 1.8 | 1.9 | |||||||||
| Gross workers’ remittances (Millions of US dollars) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| PV of PPG external debt (in percent of GDP + remittances) | … | … | 26.2 | 26.3 | 25.7 | 25.2 | 24.1 | 23.1 | 22.0 | 22.2 | 23.1 | ||||||||
| PV of PPG external debt (in percent of exports + remittances) | … | … | 25.0 | 23.9 | 23.4 | 23.1 | 22.0 | 20.9 | 19.9 | 20.3 | 21.7 | ||||||||
| Debt service of PPG external debt (in percent of exports + remittances) | … | … | 2.8 | 2.6 | 3.1 | 3.0 | 2.9 | 2.9 | 2.7 | 1.9 | 2.4 | ||||||||
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets (for Maldives bank placements abroad 4 percent of GDP); and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the 6 years– the years surrounding the 2004 Tsunami are excluded as it is a one off exceptional event.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Maldives: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2014–34
(In percent)
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Maldives: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2014–34
(In percent)
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2024 | 2034 | |
| PV of debt-to GDP ratio | ||||||||
| Baseline | 26 | 26 | 25 | 24 | 23 | 22 | 22 | 23 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 26 | 35 | 43 | 51 | 58 | 65 | 86 | 75 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 26 | 27 | 27 | 26 | 26 | 26 | 29 | 35 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 26 | 27 | 28 | 27 | 26 | 24 | 25 | 26 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 26 | 35 | 53 | 51 | 49 | 46 | 37 | 25 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 26 | 27 | 28 | 26 | 25 | 24 | 24 | 25 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 26 | 31 | 36 | 34 | 33 | 31 | 28 | 24 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 26 | 34 | 46 | 45 | 43 | 41 | 34 | 27 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 26 | 37 | 36 | 34 | 33 | 31 | 32 | 33 |
| PV of debt-to-exports ratio | ||||||||
| Baseline | 24 | 23 | 23 | 22 | 21 | 20 | 20 | 22 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 24 | 32 | 40 | 47 | 53 | 59 | 78 | 70 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 24 | 24 | 25 | 24 | 24 | 23 | 27 | 33 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 24 | 23 | 23 | 22 | 21 | 20 | 20 | 22 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 24 | 36 | 60 | 57 | 55 | 52 | 42 | 29 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 24 | 23 | 23 | 22 | 21 | 20 | 20 | 22 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 24 | 28 | 33 | 31 | 30 | 28 | 25 | 22 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 24 | 31 | 42 | 41 | 39 | 37 | 31 | 25 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 24 | 23 | 23 | 22 | 21 | 20 | 20 | 22 |
| PV of debt-to-revenue ratio | ||||||||
| Baseline | 84 | 74 | 71 | 69 | 66 | 64 | 64 | 67 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 84 | 102 | 123 | 146 | 167 | 187 | 247 | 215 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 84 | 77 | 76 | 76 | 75 | 74 | 84 | 102 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 84 | 79 | 79 | 76 | 73 | 71 | 71 | 74 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 84 | 102 | 149 | 145 | 139 | 134 | 106 | 72 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 84 | 78 | 78 | 76 | 73 | 70 | 70 | 73 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 84 | 89 | 101 | 98 | 94 | 90 | 80 | 69 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 84 | 98 | 132 | 128 | 123 | 118 | 99 | 76 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 84 | 106 | 101 | 98 | 94 | 90 | 91 | 94 |
| Debt service-to-exports ratio | ||||||||
| Baseline | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 2 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 3 | 3 | 3 | 3 | 4 | 4 | 6 | 8 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 3 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 2 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 3 | 3 | 4 | 5 | 5 | 4 | 4 | 4 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 2 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 3 | 3 | 3 | 4 | 4 | 4 | 3 | 3 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 2 |
| Debt service-to-revenue ratio | ||||||||
| Baseline | 9 | 10 | 9 | 9 | 9 | 9 | 6 | 7 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 9 | 10 | 10 | 11 | 12 | 12 | 19 | 24 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 9 | 10 | 9 | 9 | 9 | 9 | 7 | 10 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 9 | 10 | 10 | 10 | 10 | 10 | 7 | 8 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 9 | 10 | 10 | 12 | 12 | 11 | 11 | 9 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 9 | 10 | 10 | 10 | 10 | 10 | 6 | 8 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 9 | 10 | 10 | 10 | 10 | 10 | 8 | 8 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 9 | 10 | 11 | 12 | 12 | 11 | 10 | 9 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 9 | 14 | 13 | 13 | 13 | 12 | 8 | 10 |
| Memorandum item: | ||||||||
| Grant element assumed on residual financing (i.e., financing required above baseline) 6/ | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 |
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Maldives: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2014–34
(In percent)
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2024 | 2034 | |
| PV of debt-to GDP ratio | ||||||||
| Baseline | 26 | 26 | 25 | 24 | 23 | 22 | 22 | 23 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 26 | 35 | 43 | 51 | 58 | 65 | 86 | 75 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 26 | 27 | 27 | 26 | 26 | 26 | 29 | 35 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 26 | 27 | 28 | 27 | 26 | 24 | 25 | 26 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 26 | 35 | 53 | 51 | 49 | 46 | 37 | 25 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 26 | 27 | 28 | 26 | 25 | 24 | 24 | 25 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 26 | 31 | 36 | 34 | 33 | 31 | 28 | 24 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 26 | 34 | 46 | 45 | 43 | 41 | 34 | 27 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 26 | 37 | 36 | 34 | 33 | 31 | 32 | 33 |
| PV of debt-to-exports ratio | ||||||||
| Baseline | 24 | 23 | 23 | 22 | 21 | 20 | 20 | 22 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 24 | 32 | 40 | 47 | 53 | 59 | 78 | 70 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 24 | 24 | 25 | 24 | 24 | 23 | 27 | 33 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 24 | 23 | 23 | 22 | 21 | 20 | 20 | 22 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 24 | 36 | 60 | 57 | 55 | 52 | 42 | 29 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 24 | 23 | 23 | 22 | 21 | 20 | 20 | 22 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 24 | 28 | 33 | 31 | 30 | 28 | 25 | 22 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 24 | 31 | 42 | 41 | 39 | 37 | 31 | 25 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 24 | 23 | 23 | 22 | 21 | 20 | 20 | 22 |
| PV of debt-to-revenue ratio | ||||||||
| Baseline | 84 | 74 | 71 | 69 | 66 | 64 | 64 | 67 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 84 | 102 | 123 | 146 | 167 | 187 | 247 | 215 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 84 | 77 | 76 | 76 | 75 | 74 | 84 | 102 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 84 | 79 | 79 | 76 | 73 | 71 | 71 | 74 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 84 | 102 | 149 | 145 | 139 | 134 | 106 | 72 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 84 | 78 | 78 | 76 | 73 | 70 | 70 | 73 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 84 | 89 | 101 | 98 | 94 | 90 | 80 | 69 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 84 | 98 | 132 | 128 | 123 | 118 | 99 | 76 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 84 | 106 | 101 | 98 | 94 | 90 | 91 | 94 |
| Debt service-to-exports ratio | ||||||||
| Baseline | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 2 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 3 | 3 | 3 | 3 | 4 | 4 | 6 | 8 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 3 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 2 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 3 | 3 | 4 | 5 | 5 | 4 | 4 | 4 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 2 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 3 | 3 | 3 | 4 | 4 | 4 | 3 | 3 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 3 | 3 | 3 | 3 | 3 | 3 | 2 | 2 |
| Debt service-to-revenue ratio | ||||||||
| Baseline | 9 | 10 | 9 | 9 | 9 | 9 | 6 | 7 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2014–2034 1/ | 9 | 10 | 10 | 11 | 12 | 12 | 19 | 24 |
| A2. New public sector loans on less favorable terms in 2014–2034 2 | 9 | 10 | 9 | 9 | 9 | 9 | 7 | 10 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2015–2016 | 9 | 10 | 10 | 10 | 10 | 10 | 7 | 8 |
| B2. Export value growth at historical average minus one standard deviation in 2015–2016 3/ | 9 | 10 | 10 | 12 | 12 | 11 | 11 | 9 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2015–2016 | 9 | 10 | 10 | 10 | 10 | 10 | 6 | 8 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2015–2016 4/ | 9 | 10 | 10 | 10 | 10 | 10 | 8 | 8 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 9 | 10 | 11 | 12 | 12 | 11 | 10 | 9 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2015 5/ | 9 | 14 | 13 | 13 | 13 | 12 | 8 | 10 |
| Memorandum item: | ||||||||
| Grant element assumed on residual financing (i.e., financing required above baseline) 6/ | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 |
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Maldives: Public Sector Debt Sustainability Framework, Baseline Scenario, 2011–34
(In percent of GDP, unless otherwise indicated)
Public debt is defined here as the net debt of the non-financial public sector comprising the central government, SOEs, and publicly guaranteed debt. It is net of government deposits (3 percent of GDP). It does not include domestic arrears.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 6 years—the years around the 2004 Tsunami are excluded as they are a one off exceptional event.
Maldives: Public Sector Debt Sustainability Framework, Baseline Scenario, 2011–34
(In percent of GDP, unless otherwise indicated)
| Actual | Average 5/ | Standard 5/ Deviation | Estimate | Projections | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2014-19 Average | 2024 | 2034 | 2020-34 Average | ||||||
| Public sector debt 1/ | 59.5 | 61.7 | 63.0 | 74.6 | 75.5 | 77.9 | 79.8 | 81.2 | 82.1 | 89.2 | 104.4 | |||||||
| of which: foreign-currency denominated | 31.7 | 29.8 | 28.2 | 30.6 | 27.6 | 27.5 | 26.9 | 26.4 | 25.7 | 26.9 | 28.5 | |||||||
| 34.9 | 44.1 | 47.9 | 50.4 | 52.9 | 54.9 | 56.5 | 0.0 | 62.3 | 75.9 | |||||||||
| Change in public sector debt | 0.1 | 2.2 | 1.4 | 11.6 | 0.9 | 2.4 | 1.9 | 1.4 | 0.9 | 1.6 | 1.5 | |||||||
| Identified debt-creating flows | 0.7 | 3.0 | 4.0 | 8.2 | 3.6 | 2.3 | 1.8 | 1.3 | 0.9 | 1.5 | 1.4 | |||||||
| Primary deficit | 4.5 | 4.8 | 5.3 | 7.8 | 5.1 | 8.7 | 4.5 | 3.2 | 2.9 | 2.0 | 1.9 | 3.9 | 2.4 | 2.4 | 2.4 | |||
| Revenue and grants | 27.6 | 26.0 | 28.6 | 32.4 | 35.3 | 35.9 | 35.4 | 35.2 | 34.9 | 34.9 | 34.9 | |||||||
| of which: grants | 2.0 | 0.9 | 0.3 | 0.9 | 0.7 | 0.6 | 0.5 | 0.4 | 0.4 | 0.3 | 0.1 | |||||||
| Primary (noninterest) expenditure | 32.1 | 30.8 | 33.9 | 41.0 | 39.8 | 39.1 | 38.3 | 37.2 | 36.8 | 37.3 | 37.4 | |||||||
| Automatic debt dynamics | -2.8 | -1.8 | -1.3 | -0.5 | -0.9 | -0.9 | -1.1 | -0.7 | -0.9 | -0.9 | -1.0 | |||||||
| Contribution from interest rate/growth differential | -5.3 | -0.2 | -1.2 | -0.7 | -0.9 | -0.6 | -0.6 | -0.2 | -0.4 | -0.5 | -0.6 | |||||||
| of which: contribution from average real interest rate | -1.7 | 0.6 | 1.5 | 2.4 | 2.6 | 2.2 | 2.6 | 3.2 | 3.2 | 3.2 | 3.7 | |||||||
| of which: contribution from real GDP growth | -3.6 | -0.8 | -2.8 | -3.0 | -3.5 | -2.9 | -3.2 | -3.4 | -3.6 | -3.8 | -4.3 | |||||||
| Contribution from real exchange rate depreciation | 2.5 | -1.6 | -0.1 | 0.2 | 0.0 | -0.3 | -0.5 | -0.5 | -0.5 | |||||||||
| Other identified debt-creating flows | -1.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Privatization receipts (negative) | -1.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Debt relief (HIPC and other) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Other (specify, e.g. bank recapitalization) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Residual, including asset changes | -0.6 | -0.8 | -2.6 | 3.4 | -2.7 | 0.1 | 0.1 | 0.1 | -0.1 | 0.1 | 0.1 | |||||||
| Other Sustainability Indicators | ||||||||||||||||||
| PV of public sector debt | … | … | 61.7 | 70.3 | 73.6 | 75.5 | 77.0 | 78.0 | 78.6 | 84.5 | 99.0 | |||||||
| of which: foreign-currency denominated | 26.9 | 26.3 | 25.7 | 25.2 | 24.1 | 23.1 | 22.0 | 22.2 | 23.1 | |||||||||
| of which: external | 26.2 | 26.3 | 25.7 | 25.2 | 24.1 | 23.1 | 22.0 | 22.2 | 23.1 | |||||||||
| PV of contingent liabilities (not included in public sector debt) | ||||||||||||||||||
| Gross financing need 2/ | 36.5 | 37.8 | 41.5 | 47.1 | 51.8 | 54.2 | 56.5 | 58.5 | 60.0 | 66.0 | 79.6 | |||||||
| PV of public sector debt-to-revenue and grants ratio (in percent) | … | … | 215.6 | 217.2 | 208.7 | 210.5 | 217.6 | 221.4 | 225.1 | 241.9 | 283.5 | |||||||
| PV of public sector debt-to-revenue ratio (in percent) | … | … | 217.7 | 223.7 | 213.1 | 214.1 | 220.5 | 224.1 | 227.9 | 243.9 | 284.6 | |||||||
| of which: external 3/ | 92.6 | 83.6 | 74.5 | 71.3 | 69.0 | 66.3 | 63.7 | 64.1 | 66.5 | |||||||||
| Debt service-to-revenue and grants ratio (in percent) 4/ | 17.6 | 20.8 | 18.0 | 15.8 | 16.9 | 17.5 | 20.1 | 22.4 | 22.2 | 19.9 | 24.0 | |||||||
| Debt service-to-revenue ratio (in percent) 4/ | 19.0 | 21.6 | 18.1 | 16.3 | 17.3 | 17.8 | 20.3 | 22.6 | 22.5 | 20.1 | 24.1 | |||||||
| Primary deficit that stabilizes the debt-to-GDP ratio | 4.5 | 2.6 | 3.9 | -2.9 | 3.6 | 0.8 | 1.0 | 0.6 | 1.0 | 0.8 | 0.9 | |||||||
| Key macroeconomic and fiscal assumptions | ||||||||||||||||||
| Real GDP growth (in percent) | 6.5 | 1.3 | 4.7 | 5.5 | 5.4 | 5.0 | 5.0 | 3.9 | 4.2 | 4.4 | 4.6 | 4.5 | 4.5 | 4.4 | 4.5 | |||
| Average nominal interest rate on forex debt (in percent) | 1.3 | 1.4 | 1.3 | 2.0 | 0.9 | 2.7 | 3.8 | 4.0 | 4.1 | 4.2 | 4.1 | 3.8 | 3.1 | 3.1 | 3.2 | |||
| Average nominal interest rate on domestic debt (in percent) | 6.8 | 9.5 | 7.3 | 6.8 | 2.7 | 6.8 | 6.3 | 6.8 | 8.5 | 9.6 | 9.4 | 7.9 | 8.7 | 8.5 | 8.6 | |||
| Average real interest rate (in percent) | -3.1 | 1.0 | 2.6 | 0.6 | 2.5 | 3.9 | 3.7 | 3.1 | 3.4 | 4.2 | 4.1 | 3.7 | 3.8 | 3.8 | 3.8 | |||
| Average real interest rate on foreign-currency debt (in percent) | -2.1 | -1.6 | -1.4 | -1.7 | 0.7 | -1.3 | -1.4 | -1.7 | -1.9 | -1.9 | -1.9 | -1.7 | -1.9 | -1.9 | -1.9 | |||
| Average real interest rate on domestic debt (in percent) | -5.5 | 2.4 | 5.2 | 0.6 | 5.2 | 6.0 | 4.7 | 3.6 | 4.2 | 5.3 | 5.0 | 4.8 | 5.0 | 4.8 | 4.9 | |||
| Real exchange rate depreciation (in percent, + indicates depreciation) | 8.8 | -5.2 | -0.3 | -1.5 | 5.2 | 0.6 | ||||||||||||
| Inflation rate (GDP deflator, in percent) | 13.0 | 7.0 | 2.0 | 6.3 | 4.1 | 0.7 | 1.5 | 3.0 | 4.1 | 4.2 | 4.1 | 2.9 | 3.5 | 3.5 | 3.5 | |||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 0.7 | -2.7 | 15.2 | 1.9 | 5.9 | 27.1 | 1.8 | 2.1 | 2.2 | 1.3 | 3.6 | 6.4 | 4.5 | 4.4 | 4.6 | |||
| Grant element of new external borrowing (in percent) | 19.0 | 20.4 | 20.4 | 20.4 | 20.4 | 20.4 | 20.2 | 18.8 | 18.5 | |||||||||
Public debt is defined here as the net debt of the non-financial public sector comprising the central government, SOEs, and publicly guaranteed debt. It is net of government deposits (3 percent of GDP). It does not include domestic arrears.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 6 years—the years around the 2004 Tsunami are excluded as they are a one off exceptional event.
Maldives: Public Sector Debt Sustainability Framework, Baseline Scenario, 2011–34
(In percent of GDP, unless otherwise indicated)
| Actual | Average 5/ | Standard 5/ Deviation | Estimate | Projections | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2014-19 Average | 2024 | 2034 | 2020-34 Average | ||||||
| Public sector debt 1/ | 59.5 | 61.7 | 63.0 | 74.6 | 75.5 | 77.9 | 79.8 | 81.2 | 82.1 | 89.2 | 104.4 | |||||||
| of which: foreign-currency denominated | 31.7 | 29.8 | 28.2 | 30.6 | 27.6 | 27.5 | 26.9 | 26.4 | 25.7 | 26.9 | 28.5 | |||||||
| 34.9 | 44.1 | 47.9 | 50.4 | 52.9 | 54.9 | 56.5 | 0.0 | 62.3 | 75.9 | |||||||||
| Change in public sector debt | 0.1 | 2.2 | 1.4 | 11.6 | 0.9 | 2.4 | 1.9 | 1.4 | 0.9 | 1.6 | 1.5 | |||||||
| Identified debt-creating flows | 0.7 | 3.0 | 4.0 | 8.2 | 3.6 | 2.3 | 1.8 | 1.3 | 0.9 | 1.5 | 1.4 | |||||||
| Primary deficit | 4.5 | 4.8 | 5.3 | 7.8 | 5.1 | 8.7 | 4.5 | 3.2 | 2.9 | 2.0 | 1.9 | 3.9 | 2.4 | 2.4 | 2.4 | |||
| Revenue and grants | 27.6 | 26.0 | 28.6 | 32.4 | 35.3 | 35.9 | 35.4 | 35.2 | 34.9 | 34.9 | 34.9 | |||||||
| of which: grants | 2.0 | 0.9 | 0.3 | 0.9 | 0.7 | 0.6 | 0.5 | 0.4 | 0.4 | 0.3 | 0.1 | |||||||
| Primary (noninterest) expenditure | 32.1 | 30.8 | 33.9 | 41.0 | 39.8 | 39.1 | 38.3 | 37.2 | 36.8 | 37.3 | 37.4 | |||||||
| Automatic debt dynamics | -2.8 | -1.8 | -1.3 | -0.5 | -0.9 | -0.9 | -1.1 | -0.7 | -0.9 | -0.9 | -1.0 | |||||||
| Contribution from interest rate/growth differential | -5.3 | -0.2 | -1.2 | -0.7 | -0.9 | -0.6 | -0.6 | -0.2 | -0.4 | -0.5 | -0.6 | |||||||
| of which: contribution from average real interest rate | -1.7 | 0.6 | 1.5 | 2.4 | 2.6 | 2.2 | 2.6 | 3.2 | 3.2 | 3.2 | 3.7 | |||||||
| of which: contribution from real GDP growth | -3.6 | -0.8 | -2.8 | -3.0 | -3.5 | -2.9 | -3.2 | -3.4 | -3.6 | -3.8 | -4.3 | |||||||
| Contribution from real exchange rate depreciation | 2.5 | -1.6 | -0.1 | 0.2 | 0.0 | -0.3 | -0.5 | -0.5 | -0.5 | |||||||||
| Other identified debt-creating flows | -1.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Privatization receipts (negative) | -1.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Debt relief (HIPC and other) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Other (specify, e.g. bank recapitalization) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Residual, including asset changes | -0.6 | -0.8 | -2.6 | 3.4 | -2.7 | 0.1 | 0.1 | 0.1 | -0.1 | 0.1 | 0.1 | |||||||
| Other Sustainability Indicators | ||||||||||||||||||
| PV of public sector debt | … | … | 61.7 | 70.3 | 73.6 | 75.5 | 77.0 | 78.0 | 78.6 | 84.5 | 99.0 | |||||||
| of which: foreign-currency denominated | 26.9 | 26.3 | 25.7 | 25.2 | 24.1 | 23.1 | 22.0 | 22.2 | 23.1 | |||||||||
| of which: external | 26.2 | 26.3 | 25.7 | 25.2 | 24.1 | 23.1 | 22.0 | 22.2 | 23.1 | |||||||||
| PV of contingent liabilities (not included in public sector debt) | ||||||||||||||||||
| Gross financing need 2/ | 36.5 | 37.8 | 41.5 | 47.1 | 51.8 | 54.2 | 56.5 | 58.5 | 60.0 | 66.0 | 79.6 | |||||||
| PV of public sector debt-to-revenue and grants ratio (in percent) | … | … | 215.6 | 217.2 | 208.7 | 210.5 | 217.6 | 221.4 | 225.1 | 241.9 | 283.5 | |||||||
| PV of public sector debt-to-revenue ratio (in percent) | … | … | 217.7 | 223.7 | 213.1 | 214.1 | 220.5 | 224.1 | 227.9 | 243.9 | 284.6 | |||||||
| of which: external 3/ | 92.6 | 83.6 | 74.5 | 71.3 | 69.0 | 66.3 | 63.7 | 64.1 | 66.5 | |||||||||
| Debt service-to-revenue and grants ratio (in percent) 4/ | 17.6 | 20.8 | 18.0 | 15.8 | 16.9 | 17.5 | 20.1 | 22.4 | 22.2 | 19.9 | 24.0 | |||||||
| Debt service-to-revenue ratio (in percent) 4/ | 19.0 | 21.6 | 18.1 | 16.3 | 17.3 | 17.8 | 20.3 | 22.6 | 22.5 | 20.1 | 24.1 | |||||||
| Primary deficit that stabilizes the debt-to-GDP ratio | 4.5 | 2.6 | 3.9 | -2.9 | 3.6 | 0.8 | 1.0 | 0.6 | 1.0 | 0.8 | 0.9 | |||||||
| Key macroeconomic and fiscal assumptions | ||||||||||||||||||
| Real GDP growth (in percent) | 6.5 | 1.3 | 4.7 | 5.5 | 5.4 | 5.0 | 5.0 | 3.9 | 4.2 | 4.4 | 4.6 | 4.5 | 4.5 | 4.4 | 4.5 | |||
| Average nominal interest rate on forex debt (in percent) | 1.3 | 1.4 | 1.3 | 2.0 | 0.9 | 2.7 | 3.8 | 4.0 | 4.1 | 4.2 | 4.1 | 3.8 | 3.1 | 3.1 | 3.2 | |||
| Average nominal interest rate on domestic debt (in percent) | 6.8 | 9.5 | 7.3 | 6.8 | 2.7 | 6.8 | 6.3 | 6.8 | 8.5 | 9.6 | 9.4 | 7.9 | 8.7 | 8.5 | 8.6 | |||
| Average real interest rate (in percent) | -3.1 | 1.0 | 2.6 | 0.6 | 2.5 | 3.9 | 3.7 | 3.1 | 3.4 | 4.2 | 4.1 | 3.7 | 3.8 | 3.8 | 3.8 | |||
| Average real interest rate on foreign-currency debt (in percent) | -2.1 | -1.6 | -1.4 | -1.7 | 0.7 | -1.3 | -1.4 | -1.7 | -1.9 | -1.9 | -1.9 | -1.7 | -1.9 | -1.9 | -1.9 | |||
| Average real interest rate on domestic debt (in percent) | -5.5 | 2.4 | 5.2 | 0.6 | 5.2 | 6.0 | 4.7 | 3.6 | 4.2 | 5.3 | 5.0 | 4.8 | 5.0 | 4.8 | 4.9 | |||
| Real exchange rate depreciation (in percent, + indicates depreciation) | 8.8 | -5.2 | -0.3 | -1.5 | 5.2 | 0.6 | ||||||||||||
| Inflation rate (GDP deflator, in percent) | 13.0 | 7.0 | 2.0 | 6.3 | 4.1 | 0.7 | 1.5 | 3.0 | 4.1 | 4.2 | 4.1 | 2.9 | 3.5 | 3.5 | 3.5 | |||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 0.7 | -2.7 | 15.2 | 1.9 | 5.9 | 27.1 | 1.8 | 2.1 | 2.2 | 1.3 | 3.6 | 6.4 | 4.5 | 4.4 | 4.6 | |||
| Grant element of new external borrowing (in percent) | 19.0 | 20.4 | 20.4 | 20.4 | 20.4 | 20.4 | 20.2 | 18.8 | 18.5 | |||||||||
Public debt is defined here as the net debt of the non-financial public sector comprising the central government, SOEs, and publicly guaranteed debt. It is net of government deposits (3 percent of GDP). It does not include domestic arrears.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 6 years—the years around the 2004 Tsunami are excluded as they are a one off exceptional event.
Maldives: Sensitivity Analysis for Key Indicators of Public Debt, Baseline Scenario, 2014–34
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Maldives: Sensitivity Analysis for Key Indicators of Public Debt, Baseline Scenario, 2014–34
| Projections | ||||||||
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2024 | 2034 | |
| PV of Debt-to-GDP Ratio | ||||||||
| Baseline | 70 | 74 | 76 | 77 | 78 | 79 | 85 | 99 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 70 | 74 | 79 | 84 | 89 | 94 | 117 | 150 |
| A2. Primary balance is unchanged from 2014 | 70 | 75 | 82 | 88 | 95 | 101 | 131 | 181 |
| A3. Permanently lower GDP growth 1/ | 70 | 72 | 76 | 79 | 83 | 86 | 113 | 196 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2015–2016 | 70 | 76 | 84 | 88 | 92 | 95 | 114 | 148 |
| B2. Primary balance is at historical average minus one standard deviations in 2015–2016 | 70 | 79 | 89 | 91 | 91 | 91 | 95 | 107 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 70 | 78 | 87 | 89 | 91 | 92 | 102 | 121 |
| B4. One-time 30 percent real depreciation in 2015 | 70 | 82 | 83 | 84 | 85 | 85 | 90 | 106 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2015 | 70 | 80 | 82 | 83 | 84 | 84 | 90 | 103 |
| PV of Debt-to-Revenue Ratio 2/ | ||||||||
| Baseline | 217 | 209 | 211 | 218 | 221 | 225 | 242 | 284 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 217 | 208 | 219 | 237 | 253 | 269 | 334 | 430 |
| A2. Primary balance is unchanged from 2014 | 217 | 212 | 228 | 250 | 271 | 290 | 375 | 519 |
| A3. Permanently lower GDP growth 1/ | 217 | 204 | 211 | 224 | 235 | 247 | 322 | 559 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2015–2016 | 217 | 215 | 233 | 250 | 262 | 273 | 326 | 423 |
| B2. Primary balance is at historical average minus one standard deviations in 2015–2016 | 217 | 223 | 249 | 256 | 259 | 261 | 273 | 306 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 217 | 220 | 242 | 252 | 258 | 264 | 291 | 347 |
| B4. One-time 30 percent real depreciation in 2015 | 217 | 232 | 232 | 238 | 241 | 243 | 259 | 302 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2015 | 217 | 227 | 229 | 235 | 239 | 242 | 257 | 295 |
| Debt Service-to-Revenue Ratio 2/ | ||||||||
| Baseline | 16 | 17 | 17 | 20 | 22 | 22 | 20 | 24 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 16 | 17 | 18 | 23 | 27 | 29 | 34 | 49 |
| A2. Primary balance is unchanged from 2014 | 16 | 17 | 18 | 25 | 30 | 32 | 39 | 59 |
| A3. Permanently lower GDP growth 1/ | 16 | 17 | 18 | 21 | 24 | 25 | 30 | 59 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2015–2016 | 16 | 18 | 19 | 24 | 28 | 29 | 31 | 43 |
| B2. Primary balance is at historical average minus one standard deviations in 2015–2016 | 16 | 17 | 19 | 29 | 34 | 29 | 25 | 28 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 16 | 17 | 19 | 27 | 32 | 29 | 27 | 34 |
| B4. One-time 30 percent real depreciation in 2015 | 16 | 19 | 21 | 25 | 28 | 28 | 26 | 33 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2015 | 16 | 17 | 19 | 29 | 26 | 26 | 23 | 26 |
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Maldives: Sensitivity Analysis for Key Indicators of Public Debt, Baseline Scenario, 2014–34
| Projections | ||||||||
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2024 | 2034 | |
| PV of Debt-to-GDP Ratio | ||||||||
| Baseline | 70 | 74 | 76 | 77 | 78 | 79 | 85 | 99 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 70 | 74 | 79 | 84 | 89 | 94 | 117 | 150 |
| A2. Primary balance is unchanged from 2014 | 70 | 75 | 82 | 88 | 95 | 101 | 131 | 181 |
| A3. Permanently lower GDP growth 1/ | 70 | 72 | 76 | 79 | 83 | 86 | 113 | 196 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2015–2016 | 70 | 76 | 84 | 88 | 92 | 95 | 114 | 148 |
| B2. Primary balance is at historical average minus one standard deviations in 2015–2016 | 70 | 79 | 89 | 91 | 91 | 91 | 95 | 107 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 70 | 78 | 87 | 89 | 91 | 92 | 102 | 121 |
| B4. One-time 30 percent real depreciation in 2015 | 70 | 82 | 83 | 84 | 85 | 85 | 90 | 106 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2015 | 70 | 80 | 82 | 83 | 84 | 84 | 90 | 103 |
| PV of Debt-to-Revenue Ratio 2/ | ||||||||
| Baseline | 217 | 209 | 211 | 218 | 221 | 225 | 242 | 284 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 217 | 208 | 219 | 237 | 253 | 269 | 334 | 430 |
| A2. Primary balance is unchanged from 2014 | 217 | 212 | 228 | 250 | 271 | 290 | 375 | 519 |
| A3. Permanently lower GDP growth 1/ | 217 | 204 | 211 | 224 | 235 | 247 | 322 | 559 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2015–2016 | 217 | 215 | 233 | 250 | 262 | 273 | 326 | 423 |
| B2. Primary balance is at historical average minus one standard deviations in 2015–2016 | 217 | 223 | 249 | 256 | 259 | 261 | 273 | 306 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 217 | 220 | 242 | 252 | 258 | 264 | 291 | 347 |
| B4. One-time 30 percent real depreciation in 2015 | 217 | 232 | 232 | 238 | 241 | 243 | 259 | 302 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2015 | 217 | 227 | 229 | 235 | 239 | 242 | 257 | 295 |
| Debt Service-to-Revenue Ratio 2/ | ||||||||
| Baseline | 16 | 17 | 17 | 20 | 22 | 22 | 20 | 24 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 16 | 17 | 18 | 23 | 27 | 29 | 34 | 49 |
| A2. Primary balance is unchanged from 2014 | 16 | 17 | 18 | 25 | 30 | 32 | 39 | 59 |
| A3. Permanently lower GDP growth 1/ | 16 | 17 | 18 | 21 | 24 | 25 | 30 | 59 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2015–2016 | 16 | 18 | 19 | 24 | 28 | 29 | 31 | 43 |
| B2. Primary balance is at historical average minus one standard deviations in 2015–2016 | 16 | 17 | 19 | 29 | 34 | 29 | 25 | 28 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 16 | 17 | 19 | 27 | 32 | 29 | 27 | 34 |
| B4. One-time 30 percent real depreciation in 2015 | 16 | 19 | 21 | 25 | 28 | 28 | 26 | 33 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2015 | 16 | 17 | 19 | 29 | 26 | 26 | 23 | 26 |
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
In 2011, Maldives was classified as a medium performer in terms of policies and institutions by the World Bank’s Country Policy and Institutional Assessment (CPIA), averaging 3.28 over 2011–13. The indicative thresholds for medium performers are 40 percent for the PV of the debt to GDP ratio, 150 percent for the debt to exports ratio, 250 percent for the PV of the debt to revenue ratio, 20 percent for the debt service to exports ratio and 20 percent for the debt service to revenue ratio. Thresholds are applicable to public and publicly guaranteed (PPG) external debt (not to total PPG debt). Previously Maldives was rated as a high risk of external debt distress, the change in risk rating reflects net repayments of private external debt since the previous assessment and a much lower private external debt stock.
Public debt is defined as the net debt of the non-financial public sector comprising central government, State Owned Enterprises, publicly guaranteed debt and net of government deposits. It does not include domestic arrears.
Since the 2013 Article IV Staff Report nominal GDP has been revised upwards. The authorities have adopted market price GDP as their aggregate (instead of gross value added at basic prices). The revision raises the level of nominal GDP by 13 percent in 2013.
In 2012 the authorities cancelled the airport concession contract with GMR and Malaysia Airports Berhad to upgrade and operate Malé airport. Arbitration ruled in favor of GMR. Maldives Airport Company Limited (MACL) paid $4mn in immediate costs. Agreement on a final settlement has yet to be reached.
The baseline scenario in the DSA assumes that the stabilized exchange rate regime holds.
The real growth measure used in this report is gross value added at basic prices.
Around three quarters of activity is directly or indirectly linked to tourism. Maldives is a high end tourist destination with around 60 percent of resorts in the 5 star and plus category, and demand is relatively price and income inelastic. The authorities expect to lease ten new resorts a year. A second runway at the airport will also add to capacity.
Revisions to the balance of payments data are consistent with IMF technical assistance advice. Revisions substantially reduced the current account deficits from around 20 percent of GDP to single digits in 2012 and 2013.
In Maldives while such large domestic financing may have a small effect crowding out domestic activity, it is unlikely to affect tourism (which accounts for around three-quarters of activity in Maldives directly and indirectly), since the resorts typically obtain their financing from abroad. The impact on growth is not as adverse as for other economies.
