The World Bank has said there is no immediate risk to the Maldives' economy but has advised taking precautions against a possible situation.
The World Bank's "Maldives Public Expenditure Review" said the government's expenditure has far exceeded its revenue. Therefore, it is essential to identify ways to increase revenue, it said.
Noting that one-third of the revenue is spent on salaries of employees, the report said that with the implementation of minimum wage and salary equalization policy in the Maldives, the government's expenditure on salaries would continue to increase in the coming days.
The increase in the number of elderly people in the Maldives will also increase the cost of pensions in the future, the report further noted. The state is already giving "double pensions" to some people, the bank said, advising the government to cease the practice. The report also suggested providing free medical services only to the needy instead of all citizens.
The World Bank said the Maldives' expenditure exceeded revenue from 2014 to 2019 and depended on borrowings. There is a significant increase in spending on development projects in the country, with the most significant spending on housing and health projects. However, the cost of the projects is not equal to the solutions it provides, the report noted.
The World Bank also believes that the government's decision to increase GST is a good decision to increase revenue. It also proposed to reduce the threshold for income tax. The initiatives to increase revenue are the right steps that can be taken at this time, the World Bank said.
The Maldives' total debt has exceeded MVR 100 billion, and the government will have to repay a large amount in loans in 2026. Some question whether the amount can be paid by the Maldives.