The crystal-clear water paradise of Maldives is going through a bold economic drive led by the current President Yameen Abdul Gayyoom. Anyone who had visited the country in the past year would have seen tremendous development around the capital city, Male, as well as in various regions or Atolls; as called in this coral island nation.
The President’s policy is based on investing to improve the infrastructure of local communities, strongly believing that this is the type of investment that will bring long-term prosperity to a population of less than 400,000 people.
Past governments had also tried to do the same, however, they did not achieve the success seen today on the ground of Maldives. The country is going through one of the fastest economic transformation in its history.
With all these developments, a lot of borrowing will undoubtedly take place by the Maldives government. The International Monetary Fund (IMF) has recommended caution towards this move since it would increase the country’s current account deficit in the short term.
The IMF recommended that the Maldives establish a gradual tightening of its monetary stance so as not to impede credit in support of economic growth.
The people of Maldives are less likely to lend their time to such recommendations since they aren’t too fond of accepting IMF suggestions on how their government should manage economic policies; especially since the country’s worst currency fallout was directly linked to a previous IMF recommendation during the term of President Nasheed.
Regarding the IMF report on the Maldives, positive signs were mentioned concerning how the country’s economy has been steadily growing from 3.9 percent in 2016, and continues to do so in the long-term forecast.
The projected economic growth is tied to the massive infrastructure projects which include the expansion of the International and regional airports to accommodate the growing tourism industry.
Land connectivity projects include the China-Maldives Friendship Bridge that links the capital city, Male’, to the island where the International Airport is located.
Last but not least, there are large-scale micro-economic social investments for constructing and improving local island harbours, sewage systems and desalination plants. All these are investments which the Maldivian President continuously states should be part of the basic right of every citizen.
In the meantime, the IMF has cautioned that the short-term stress to the country’s economy is mainly due to these investments which increase the already elevated public debt, external financing risks, as well as ongoing political tension between the opposition and the government.
The recent loss of the President’s Progressive Party of Maldives in local elections of May 2017 has added to the political uncertainty of the country’s future.
The IMF had taken all factors into account, yet it still concluded a long-term positive growth for the country since the GDP of Maldives is expected to gradually grow in the short term, and inflation is predicted to remain stable.
Considering the political turmoil in his first term, even some of the President’s critics have been quoted to say that they were impressed by his achievement in infrastructural development.