මාතෘකා
ගවේෂණය කරන්න
විදසුන්
The Maldives’ primary deficit still remains high
The Maldives’ primary deficit has increased since 2020, raising concerns about the country’s debt sustainability. This contrasts with Sri Lanka, where the primary deficit also increased but recovered, following its suspension of debt repayments, along with a fiscal consolidation program. A primary deficit—or negative primary balance—occurs when government revenue is insufficient to cover non-interest expenditure. All deficits are funded through borrowing, which can contribute to long-term fiscal risks. Before 2020, the Maldives’ primary balance was already in deficit, ranging from 1%–5%. In 2020, it climbed above 20% due to the sharp decline in revenue and economic activity caused by the COVID-19 lockdowns. Although the tourism-dependent economy has begun to recover, the primary deficit remains high—around 10%—as spending continues to outpace revenue. Sri Lanka also faced an increased primary deficit in 2020 and 2021, driven partly by the pandemic but largely due to misguided fiscal policies. This led to the country’s worst debt crisis and a default on external debt. Sri Lanka has since shown signs of recovery, achieving a positive primary surplus in 2023 and 2024 with support from an IMF program focused on fiscal consolidation and revenue enhancement. Moving forward, it is important for the Maldives to identify and address its fiscal challenges, such as the higher primary deficit, promptly, to avoid a crisis similar to Sri Lanka. Previous analysis has highlighted that the country’s reserves are on a declining trajectory similar to Sri Lanka and could be depleted within the next two years unless decisive corrective measures are implemented.
විදසුන්
The Maldives’ primary deficit still remains high
The Maldives’ primary deficit has increased since 2020, raising concerns about the country’s debt sustainability. This contrasts with Sri Lanka, where the primary deficit also increased but recovered, following its suspension of debt repayments, along with a fiscal consolidation program. A primary deficit—or negative primary balance—occurs when government revenue is insufficient to cover non-interest expenditure. All deficits are funded through borrowing, which can contribute to long-term fiscal risks. Before 2020, the Maldives’ primary balance was already in deficit, ranging from 1%–5%. In 2020, it climbed above 20% due to the sharp decline in revenue and economic activity caused by the COVID-19 lockdowns. Although the tourism-dependent economy has begun to recover, the primary deficit remains high—around 10%—as spending continues to outpace revenue. Sri Lanka also faced an increased primary deficit in 2020 and 2021, driven partly by the pandemic but largely due to misguided fiscal policies. This led to the country’s worst debt crisis and a default on external debt. Sri Lanka has since shown signs of recovery, achieving a positive primary surplus in 2023 and 2024 with support from an IMF program focused on fiscal consolidation and revenue enhancement. Moving forward, it is important for the Maldives to identify and address its fiscal challenges, such as the higher primary deficit, promptly, to avoid a crisis similar to Sri Lanka. Previous analysis has highlighted that the country’s reserves are on a declining trajectory similar to Sri Lanka and could be depleted within the next two years unless decisive corrective measures are implemented.
විදසුන්
The Maldives’ primary deficit still remains high
The Maldives’ primary deficit has increased since 2020, raising concerns about the country’s debt sustainability. This contrasts with Sri Lanka, where the primary deficit also increased but recovered, following its suspension of debt repayments, along with a fiscal consolidation program. A primary deficit—or negative primary balance—occurs when government revenue is insufficient to cover non-interest expenditure. All deficits are funded through borrowing, which can contribute to long-term fiscal risks. Before 2020, the Maldives’ primary balance was already in deficit, ranging from 1%–5%. In 2020, it climbed above 20% due to the sharp decline in revenue and economic activity caused by the COVID-19 lockdowns. Although the tourism-dependent economy has begun to recover, the primary deficit remains high—around 10%—as spending continues to outpace revenue. Sri Lanka also faced an increased primary deficit in 2020 and 2021, driven partly by the pandemic but largely due to misguided fiscal policies. This led to the country’s worst debt crisis and a default on external debt. Sri Lanka has since shown signs of recovery, achieving a positive primary surplus in 2023 and 2024 with support from an IMF program focused on fiscal consolidation and revenue enhancement. Moving forward, it is important for the Maldives to identify and address its fiscal challenges, such as the higher primary deficit, promptly, to avoid a crisis similar to Sri Lanka. Previous analysis has highlighted that the country’s reserves are on a declining trajectory similar to Sri Lanka and could be depleted within the next two years unless decisive corrective measures are implemented.
විදසුන්
The Maldives’ primary deficit still remains high
The Maldives’ primary deficit has increased since 2020, raising concerns about the country’s debt sustainability. This contrasts with Sri Lanka, where the primary deficit also increased but recovered, following its suspension of debt repayments, along with a fiscal consolidation program. A primary deficit—or negative primary balance—occurs when government revenue is insufficient to cover non-interest expenditure. All deficits are funded through borrowing, which can contribute to long-term fiscal risks. Before 2020, the Maldives’ primary balance was already in deficit, ranging from 1%–5%. In 2020, it climbed above 20% due to the sharp decline in revenue and economic activity caused by the COVID-19 lockdowns. Although the tourism-dependent economy has begun to recover, the primary deficit remains high—around 10%—as spending continues to outpace revenue. Sri Lanka also faced an increased primary deficit in 2020 and 2021, driven partly by the pandemic but largely due to misguided fiscal policies. This led to the country’s worst debt crisis and a default on external debt. Sri Lanka has since shown signs of recovery, achieving a positive primary surplus in 2023 and 2024 with support from an IMF program focused on fiscal consolidation and revenue enhancement. Moving forward, it is important for the Maldives to identify and address its fiscal challenges, such as the higher primary deficit, promptly, to avoid a crisis similar to Sri Lanka. Previous analysis has highlighted that the country’s reserves are on a declining trajectory similar to Sri Lanka and could be depleted within the next two years unless decisive corrective measures are implemented.
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මාතෘකා
Maldives
Maldives
Insights and analysis on Maldives
Maldives' net international reserves turn negative
For the first time in its history, the Maldives' net international reserves fell below zero at the end of October 2024. This marks a critical point in the country’s external position and raises concerns about the adequacy of foreig...
විදසුන් කියවන්න: Maldives
Maldives debtMaldives debt continues to...
The Maldives faces a significant economic...
Maldives' net international reserves tur...
For the first time in its history, the Ma...
Maldivian government’s interest costs ne...
In 2024, the Maldives is expected to spen...
VAT revenue collection: Maldives highest...
Sri Lanka has t...
The Maldives’ primary deficit still rema...
The Maldives’ primary deficit has i...
Maldives’ reserves continue to dip
The external reserves of the Maldives hav...
වීශේෂාංග
ශ්රී ලංකාවේ ණය පිළිබඳ තොරතුරු අනාවරණය: ශ්රී ලං...
පහත ප්රස්ථාරයෙන් 2022 සැප්තැම්බර් අග වන විට ශ්රී ලංකාවේ විදේශ ණය හිමිකම නිරූපණය කෙරේ.
වැඩිදුර කියවන්න
The Problem with Procurement
Sri Lanka’s lack of compliance with the RTI Act and failure to meet IMF Commitments.Sri Lanka’s 2023 IMF Programme includes a commitment to disclose public procurement contracts through an online fiscal transparen...
වැඩිදුර කියවන්න
Sri Lanka’s new personal income tax structure redu...
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, a...
වැඩිදුර කියවන්න
