IMF forecasts Maldives will be the eighth most indebted country in the world

Maldives will be the eighth most indebted country in the world this year when measured against economic productivity, according to the latest forecast by the International Monetary Fund (IMF).

The IMF’s April Economic Outlook projects that Maldives’ debt-to-GDP ratio will reach 129.4 percent by the end of 2026, making it the most indebted country in South Asia.

Based on the list of countries included in the report, Maldives is expected to rank eighth globally in terms of debt relative to GDP. The countries with the highest debt-to-GDP ratios this year are:

• Japan: 204.4 percent 
• Singapore: 171.9 percent 
• Sudan: 169.1 percent 
• Bahrain: 152.4 percent 
• Italy: 138.4 percent 
• Greece: 136.9 percent 
• Senegal: 132.3 percent 
• Maldives: 129.4 percent 
• United States: 125.8 percent 
• Ukraine: 122.6 percent 

IMF data compiled since 1997 shows that Maldives’ debt-to-GDP ratio peaked during the pandemic in 2020, reaching 155.7 percent. The ratio then declined in 2021 and 2022, before rising again in 2023 to 122.4 percent. Following the presidential election year, the figure increased to 133.3 percent in 2024.

Although the debt ratio fell to 125.4 percent last year, the IMF forecasts that it will rise again in 2026.

The IMF had previously projected that Maldives’ economy would grow by four percent or more this year. However, global economic shocks triggered by the US-Israeli war against Iran on February 28 have led to revised estimates.

In its April outlook, the IMF forecast Maldives’ economic growth at three percent, compared to five percent growth recorded last year.

An IMF mission visited Maldives from 4 to 14 last month to assess the country’s economic situation. In its concluding statement, the Fund noted that although the war in the Middle East has negatively affected tourism and the broader economy, it remains cautiously optimistic and expects growth to resume next year with strong policy measures.

The IMF’s April report forecasts Maldives’ economy to grow 4.6 percent in 2027.

Despite this outlook, the IMF has stressed the need for the government to reduce public spending. Recommended measures include reviewing subsidies and targeting them to the most vulnerable, and reforming state-owned enterprises (SOEs) to reduce fiscal pressure. The Fund also highlighted the importance of investing in renewable energy to lower fuel consumption.

The government passed a record-high budget this year, driven largely by USD 1.1 billion in debt obligations.