President Dr. Mohamed Muizzu has emphasised that despite the economic recovery following the COVID-19 pandemic, the country's debt did not decrease, attributing it to the imprudent policies and wasteful practices of the previous government.
Delivering his Presidential Address, President Dr. Muizzu assessed the economic condition upon assuming office, identified contributing factors, and outlined his initiatives to address the challenges.
Additionally, President Dr. Muizzu acknowledged that despite a positive economic outlook, significant challenges persist in the state's finances. He highlighted the widening revenue-expenditure gap and an escalating fiscal deficit to an unsustainable level. He pointed out that the budget deficit reached USD900 million in 2020 due to the pandemic-induced economic slowdown, noting that the 2019 deficit was even higher at USD950 million.
Furthermore, President Dr. Muizzu stated that upon assuming office, the country was burdened with debt, revealing that approximately USD520 million had been printed to meet state expenditures in the last five years, which is an amount incomparable to the total printed in the previous four decades. He emphasised that the government inherited high debt in state-owned enterprises (SOEs), coupled with an increase in administrative and staffing expenses to unprecedented levels.
Moreover, President Dr. Muizzu said that the financial and debt situation of the government has proven more challenging than anticipated at the outset of its term. As such, he said that a strategy has been devised to restore debt sustainability, in the Week 14 Roadmap. He also outlined the government's planned efforts to minimise the long-term burden on state finances.