Maldives Seeks International Assistance to Recover From Economic Strain, Finance Minister Says

The Maldives has requested assistance from international financial institutions to strengthen state reserves and implement economic reform measures to recover from economic difficulties, Finance Minister Hassan Zareer has said. In an interview with Reuters, Zareer said that while the Maldives is a country that imports all the oil it needs, Middle East tensions and the resulting rise in oil prices have caused spending on fuel subsidies to increase threefold this year. As a result, there is fear that the state budget deficit could rise from the previously projected 7.1 percent to 9 percent, Zareer said. The minister said the government is now giving the highest priority to reducing state spending and fiscal consolidation efforts. However, Zareer said assistance from the World Bank and other international partners is needed at this time to put the economy back on the right track. Although the Maldives' economic momentum has slowed, the government projects the economy will grow 3.8 percent next year and 6.8 percent in 2028. To achieve this target, the World Bank has agreed to provide $250 million over the next three years. Last month, a $1.5 billion framework agreement was also signed with the International Islamic Finance Corporation (ITFC). Additionally, the minister said efforts are underway to acquire more aircraft for the national airline to boost tourism and increase flights to new markets such as Australia. Zareer said the government's aim is to diversify the economy and increase renewable energy use by 33 percent by 2028.