When the current administration assumed office in November 2023, the Maldives was in a precarious and highly vulnerable economic state. As a result of years of financial mismanagement by the previous administration, including printing USD 519,000 and repaying USD 1.56 per head for every USD 6.49 generated as revenue, the economic situation plunged further down into an abyss.
Inheriting soaring debt, the current adminisstratio undertook extensive efforts to stabilise the economy over the past year. This included creating and implementing a plan to settle outstanding payments to contractors and service providers who had worked on government projects.
In addition, relevant agencies collaborated to address critical issues within the Aasandha medical insurance system and arrange bulk procurement of medicines. The administration previously revealed that the profit margin of some imported medicines ranged between 200 percent and 2000 percent, an issue now addressed.
Last year, the government signed multiple contracts worth millions, including loan assistance for infrastructural projects and the funds for upcoming projects across various sectors.
While the current government has been taking responsible steps to fix the country’s economy, serious and concerning issues in recording state expenditure were identified by the Ministry of Finance, leading to the temporary suspension in publishing the Weekly Fiscal Development report. This resumed once the issues were resolved.
The Finance Minister, Moosa Zameer revealed that the 2024’s budget had to accommodate a total of USD 162.1 million in bills from 2022 and 2023. He has expressed concerns about the existence of other such bills, and has asked the Auditor General’s Office (AGO) to look into it. Moreover, the Ministry said over USD 194.5 million outstanding from 2023 cash flow posted in last year’s budget, has now been cleared.
In 2024, one of the most important tasks undertaken by the Finance Ministry was the work on the state budget. Instead of allocating smaller amounts on the budget for development projects, the 2025 budget allocates adequate amounts to produce results in government funded projects.
According to the Finance Ministry, the main objective for the current year’s budget is to restore fiscal and debt sustainability. With USD 3.67 billion approved as this year’s budget, important bills such as the Sovereign Development Bill and the National Debt Bill were submitted to the Parliament last year. The government also worked closely with the central bank, Maldives Monetary Authority (MMA) to strengthen reserves.
Efforts are also underway to establish a designated office to bring about reform to the government’s financial sector. With the establishment of this office, the government will be able to monitor the extent of implementation of desired reforms to reduce expenditure and increase revenue, and relevant agencies can work together to bring about the changes, according to the government.
With these significant efforts, 2024 was a year of significant efforts to restore public confidence in the country’s public finance system.