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Is Maldives going down Sri Lanka's path?: Maldives is increasingly finding it difficult to cover recurrent expenditure.

Since 1983, Sri Lanka has faced the continuous challenge of its revenue falling short of covering recurrent expenditure. As highlighted in this article, the graph below shows the widening gap between total revenue (and grants) and expenditure in the current economic climate. This gap accentuates the nations difficulty in balancing its finances. Furthermore, this trend emphasizes the requirement in borrowing to finance not just capital projects but also for governments routine operations. The fact that Sri Lanka must borrow to finance even basic operational costs for decades signals a concern on the country’s fiscal health.

Subsequently, when looking at Maldives’s fiscal performance it seems to echo Sri Lanka’s trajectory. In the post COVID-19 era, Maldives appears to be grappling with a challenge similar to that of Sri Lanka to bridge the gap between Revenue and Grants and Recurrent Expenditure. These parallels suggest that both Maldives and Sri Lanka are facing significant fiscal pressures in the current economic climate.

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