World Bank: Majority of State Budget Deficit Covered by Maldives Central Bank

During the presentation of the World Bank's "Maldives Development Update: Scaling Back and Rebuilding Buffers (May 2024)," Country Economist and Resident Coordinator for Maldives, Erdem Atas, highlighted the government's heavy reliance on the MMA and commercial banks for financing. As of January 2024, 60 percent of MMA's assets were invested in government securities.

Efforts to stabilize these investments began in November 2023, Atas noted. Additionally, he mentioned that 30 percent of the country's entire banking sector is tied up in government Treasury Bills (T-Bills) and Treasury Bonds (T-Bonds).

Despite these challenges, the Maldivian banking system has grown by nine percent. However, by the end of 2023, the government had printed MVR 4.4 billion (USD 285.3 million) from the Public Bank Account (PBA).

Given the current fiscal situation, the World Bank strongly urged the Maldives to cut costs and implement fiscal reforms as soon as possible to improve the country's economic stability.