Two Years Into President Muizzu’s Tenure, Maldives Presents Itself as Rescued From Fiscal Collapse

As President Dr Mohamed Muizzu’s administration reaches its 104th week in office, officials are presenting what they describe as their most significant accomplishment: pulling the Maldives back from the brink of bankruptcy. The statement, they contend, reflects not only political messaging but also a crisis repeatedly underscored by international financial institutions.

Government officials said the administration inherited a state burdened with unsustainable debt and facing potential collapse. They described extensive expenditures that yielded little result and pointed to what they called irresponsible management of the treasury. Among the cited irregularities was the expenditure of approximately USD 129.71 million in 2023, which was omitted from that year’s expense records and instead recorded, contrary to financial regulations, in the following year’s accounts.

Overhauling fiscal governance to restore accountability

In response, the President Muizzu’s administration pursued sweeping reforms. Although a Fiscal Responsibility Act had previously existed, officials said the former government disregarded its provisions.

During the first year in office, the administration highlighted adherence to responsibility within the budget framework established by its predecessor. In its second year, more profound legislative changes were enacted. The former Fiscal Responsibility Act was abolished, a new Fiscal Responsibility Act was introduced, and the legislation mandated the drafting of a Fiscal Policy Charter every five years. Stricter accountability measures were also established, requiring parliamentary oversight of expenditures.

Officials said the administration’s guiding principle is to align state expenditure with revenue, rejecting the entrenched practice of operating with persistent deficits.

Surpluses reported as signs of stabilisation

By its second year, the government reported success in reducing expenditure while increasing revenue. Tax reforms, implemented in July of the current year, contributed significantly to this outcome. Data from the Ministry of Finance and Planning indicate that the state has operated in surplus for more than 40 consecutive weeks.

New revenue streams have also been introduced. The importation of Very Low Sulphur Fuel Oil (VLSFO), a commodity previously absent from Maldivian markets, enabled the establishment of bunkering services. Officials said the initiative has generated revenue exceeding USD 11.67 million and described it as a critical first step in building a sustainable economy. They noted that earlier administrations had discussed such ventures but failed to implement them.

Diversification positioned as a national priority

Reducing reliance on tourism has been a strategic priority for the President Muizzu administration. Officials pointed to reforms in the Special Economic Zone framework, the launch of Sustainable Township projects requiring a minimum investment of USD 500 million, and the introduction of a residency-by-investment visa system designed to attract foreign capital.

Private sector engagement has also been highlighted. The government reported that 206 projects have been handed over to private parties, enabling 53 companies to operate simultaneously without dependence on the state budget. Tourism and infrastructure remain central to growth. The opening of the new passenger terminal at Velana International Airport has been described by officials as the “engine” of future economic expansion.

Citizen services have likewise been expanded. Under presidential directives, ATM facilities have been established across all inhabited islands, ensuring access to basic banking services for populations both large and small. Officials credited the initiative with empowering citizens financially and invigorating local economies.

The government also sought to shield households from global market fluctuations. In October of last year, 23 items were added to the essential food list, ensuring their availability at affordable prices.

Administration notes debt repayment and fiscal discipline

The government said it has stabilised and salvaged an economy it describes as “designed for bankruptcy”. Officials highlighted that these achievements have been realised while honouring all financial obligations, with no delays in debt repayment. They portray the record as evidence of a disciplined fiscal policy, advancing at what they characterise as a rapid pace.