Finance Minister says Maldives must combine cost‑cutting with new borrowing to manage Middle East war impact

Finance Minister Moosa Zameer said Sunday that the government may need to take cost‑cutting measures, including suspending or extending certain projects, due to the economic impact of the ongoing conflict in the Middle East. However, he stressed that the government will also need to take on additional debt to manage essential expenses.

Zameer, speaking at a press conference held by the ministerial committee formed to assess the impact of the war involving Iran, Israel and the United States, said he has briefed President Dr Mohamed Muizzu and sought guidance on the government’s response.

He said the administration is working to ensure that basic services remain uninterrupted, including the supply of medicines, food, fuel, and financial support for Maldivian students abroad.

According to Zameer, the government estimates that the conflict could cost the Maldives MVR 85–90 million if it continues for a month.

He said spending cuts are being examined, though some areas cannot be reduced.

“One of the instructions the President gave us today is to prioritise housing and health, to ensure uninterrupted healthcare services and to avoid halting ongoing housing projects,” he said.

If the conflict continues, Zameer said the government will need to take measures such as extending project timelines to manage costs. At the same time, he noted that the Maldives must also work to raise funds.

He said fuel imports require foreign currency, which the government plans to secure through multilateral agencies and by taking on additional debt.

“This doesn’t mean we will stop everything. We will continue essential work, raise the debt needed, and manage cash flow,” he said.

Zameer said current reports suggest the fighting could continue for around six months. Even so, the government will work to minimise revenue losses.

The Maldives faces a heavy debt burden this year, with USD 1 billion due, including USD 500 million next month. The country’s credit rating has declined due to its debt levels, and international agencies have long advised the government to reduce spending.

The government has reiterated its commitment to meeting debt obligations.

The conflict has disrupted global air traffic and reduced flights on major routes. The closure of the Strait of Hormuz, a key oil transit point, has further strained supply chains and driven up global fuel prices.

Major economies have begun implementing cost‑cutting measures, including limiting fuel sales and restricting vehicle use. Experts have expressed concern that the Maldives has not yet taken similar steps.