WikiLeaks:
Maldives was on the brink of Bankruptcy in 2009

A document made public though the WikiLeaks diplomatic cables has revealed that the Maldives was on the brink of bankruptcy back in 2009.

Transmitted as unclassified on the 13th of August 2009 from the US Embassy in Colombo to the US offices in Dhaka, Chennai, Kolkata, Mumbai, New Delhi, Kathmandu, Islamabad, Karachi, US Department of Commerce and the US State Department, the cable highlighted a summary of the economic situation of the Maldives at that time.

It stated that US officials had meetings with the then members of the Maldivian cabinet; Foreign Minister Ahmed Shaheed, Vice President Mohamed Waheed, Quamee party leader and former Attorney-General Hassan Saeed, and that they had highlighted the economic turmoil the country was been experiencing over the course of 2009.

The cable stated that according to Hassan Saeed, the Central Bank had USD 67 million, or ten days of foreign reserves at that time.

It noted that Foreign Minister Shaheed had informed them that a team from the International Monetary Fund (IMF) was to arrive in Male’ on the week of 10th August 2009 to conduct an assessment and determine how much money would be needed to stabilize the economy. The Foreign Minister had expressed concern about the loan, noting that his government in power at the time, had no experience dealing with the IMF.

The cable continues to detail the situations that had led to the worsening of the economy.

It noted that the former Gayoom's administration had awarded projects worth USD 117 million to contractors in 2008, of which only USD 10.2 million of the money owed was paid back.

The cable noted that 2009 budget deficit was at USD 109 million, and that the total debt had reached an alarming USD 445 million, or almost 60 percent of GDP, which made the country one of the most debt-laden countries in the world in 2009.

While the Nasheed administration had no control over the spending of former president Maumoon’s government, Nasheed did little to improve the financial situation when it first came to power, as he had increased Government salaries and employee rolls throughout the administration, resulting in additional payments of USD 78 million.

Rather than tighten spending or increase revenue, the government borrowed USD 187.5 million from the Central Bank, the equivalent of printing money, increasing inflationary pressure.