The Maldives continues to be at high risk of debt distress. As in the 2019 Article IV debt sustainability analysis (DSA) published on June 2019, all indicators except the debt-to-exports ratio breach their respective thresholds under the baseline scenario but they display medium-term downward trends. In response to the shock to the economy caused by the Coronavirus 2019 (COVID-19) outbreak, the authorities have taken steps to reduce non-priority recurrent and capital spending as well as rebalance the distribution of available resources. Given the changes in domestic and global conditions, the authorities have committed to reprioritize and cut capital expenditures which are projected to decline in the next few years, helping to put debt on a decreasing path. Rollover risks from the repayment of two outstanding international sovereign bonds are mitigated both by the sovereign development fund (SDF) and by the preemptive voluntary extension of a privately placed United States (U.S.) 100 million dollars bond due in 2023 (now due in 2026). Thus, staff judge public debt in Maldives to be sustainable. This assessment of debt sustainability is predicated on the implementation of the authorities’ stated policies which are substantial and require a high level of commitment. Updates of the economic impact and policy response to the COVID-19 crisis are rapidly evolving and risks are heavily tilted to the downside.
Details
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Document Date
2020/04/01
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Document Type
Board Report
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Report Number
149890
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2020/06/22
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Disclosure Status
Disclosed
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Doc Name
Maldives - Joint World Bank-IMF Debt Sustainability Analysis
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Keywords
public debt; real gdp; debt service; contingent liabilities; contingent liability; market financing; debt-creating flow; current account deficit; natural disaster; commodity price; primary balance; alternative scenarios; Public and Publicly Guaranteed; nominal interest rate; public sector debt; risk of debt; capital expenditure; holders of government debt; real exchange rate depreciation; real interest rate; sovereign bond; primary deficit; financing need; export ratio; grace period; exchange rate change; total public debt; external debt sustainability; external debt indicator; public debt sustainability; primary fiscal deficit; guaranteed debt; dollar term; baseline scenario; domestic financing; short-term debt; domestic debt; source of financing; personal income tax; rising sea levels; outstanding domestic debt; commodity price shock; lower oil price; high debt levels; domestic public debt; private external debt; debt sustainability analysis; decline in revenue; domestic debt market; private investment rate; capital spending plan; public sector investment; sustainability of debt; social security fund; extra budgetary fund; exchange rate projections; private sector debt; state-owned enterprise; public debt dynamics; public sector borrowing; Effective interest rate; contribution of capital; macroeconomic and fiscal; foreign exchange resource; change in arrears; total external debt; Learning and Innovation Credit; debt relief; tourism sector; tourist arrival; debt external; fiscal adjustment; external financing; sustainability indicator; tourism receipts; high ratio; state policy; data availability; first year; concessional term; airport expansion; grant element; sensitivity analysis
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Citation
Maldives - Joint World Bank-IMF Debt Sustainability Analysis (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/293831592861168276/Maldives-Joint-World-Bank-IMF-Debt-Sustainability-Analysis