The Maldives' economy is expected to grow by 5 percent in 2025, driven by robust tourism activity, the International Monetary Fund (IMF) has said.
An IMF mission visited Malé during February 3 – 16 to discuss recent economic developments, the outlook, and the country’s policy priorities.
At the end of the mission, a statement by Piyaporn Sodsriwiboon who led the mission said the opening of Velana International Airport (VIA) terminal expansion would ease supply-side bottleneck for tourism and help sustain growth momentum over the medium term.
“Thanks to the Maldives’ strong tourism base, growth has held up well. Real GDP growth is projected at 5 percent in 2025,” the statement said.
The IMF in the statement lauded the government’s homegrown fiscal reform agenda aimed at restoring macroeconomic stability and debt sustainability.
In that regard, the statement noted the discontinuation of exceptional use of Maldives Monetary Authority (MMA) advances and the passage of the Fiscal Responsibility Act and Public Debt Management Act as important steps towards macroeconomic stability.
In addition to the revenue mobilization measures enacted by the government, the IMF pressed on the need for more urgent and stronger fiscal consolidation through expenditure rationalisation, improving spending efficiency and protecting priority social spending.
Subsidy reforms, which phase out untargeted subsidies and roll out well-targeted direct income transfers to vulnerable households, should be introduced as envisaged in the 2025 Budget, the statement said.
“The reprioritisation and rationalization of the public sector investment program (PSIP) is critically necessary to address immediate fiscal challenges. Building on recent progress, the reforms of state-owned enterprises (SOEs) and Aasandha-healthcare reforms should be continued,” IMF said.
“Swift implementation of expenditure reform measures as outlined in the 2025 Budget would be key to reduce imbalances in an orderly manner and restore economic stability.”
IMF has also urged for reforms to strengthen climate resilience, improve the business climate and governance, and enhance skill developments will support stronger external competitiveness and strong, sustainable, and inclusive growth.