Debt is increasing the dangers to the economy

Male' South side harbor and the T-Jetty area. (Sun Photo/Fayaz Moosa)

The World Bank has advised the Maldives that debt is becoming dangerous to the economy and called on the country to cut down its recurrent costs and manage social spending.

“The South Asia Economic Focus Report” formed by the World Bank stated that the Maldivian government’s expenditure was too much and has to cut down and manage its social spending. The report also stated that the effects of government loans and guaranteed loans were being felt by the country’s economy and that the risk of external loans and non-concessional loans was huge for the country.

According to the report, there was a huge proportional difference with welfare expenses and other community expenses and also noted that more poverty exists in the South of the country. The report noted that every one person in five was living in poor conditions in the South of the country, before calling for equal economic and social opportunities for all parts of the country.

The report also noted that the Fiscal Deficit of the country stood at 4.7 percent by 2018. Even though this number had reduced within the first six months of 2019, the dangers to the economy have still not receded, according to the report.