The Ministry of Finance has addressed recent remarks by former Finance Minister Ibrahim Ameer regarding the recent credit rating downgrade of the Maldives by Fitch Ratings. The Ministry clarifies that the downgrade stems from the previous administration's failure to implement essential measures to reduce state expenditure.
In response to the former Minister’s comments, the Ministry asserts that these statements misrepresent the financial situation and fiscal concerns of the administration. The Ministry’s statement highlights that, despite the former administration’s claims, the Maldivian economy is among the fastest-growing post-COVID-19 and is projected to continue its rapid recovery.
The Finance Ministry acknowledges that while the previous administration’s decision to increase the Goods and Services Tax (GST) in 2023 was a positive step, the failure to implement the most critical fiscal measures—specifically, reducing government expenditure—was a significant oversight. The lack of action on this front led to a mismatch between government revenue and expenditure, exacerbating the national debt and risking fiscal sustainability. The International Monetary Fund (IMF) had warned in 2022 that these fiscal missteps had heightened the risk of default in the medium term.
The statement further explains that the Fitch Ratings downgrade primarily reflects the previous government’s delay in implementing necessary fiscal reforms. While the former administration had outlined a framework for expenditure reduction in the 2024 budget, it did not provide a detailed action plan before the end of their term.
Currently, the Ministry of Finance is actively working to complete the technical groundwork for these reforms and implement effective measures to reduce costs and enhance fiscal stability.