Maldives may face Sri Lanka-like economic crisis if not careful in taking loans: Report
Apr 23, 2022
Male [Maldives], April 23 : Maldives and Sri Lanka-- two nations whose economies are heavily dependent on tourism-- suffered a big blow due to COVID-enforced regulations after the outbreak of the pandemic.
Two years after the pandemic, Maldives's economy bounced back and is doing extremely well in comparison with Sri Lanka which is battling its worst economic crisis in the last four decades.
Both the nations indulged a lot in borrowing money from foreign nations, especially China. Sri Lanka was a step ahead when it came to rendezvousing with China as it borrowed billions of dollars to build ports and airways to revive the economy after the end of the civil war in 2009, reported the Maldives Voice.
If one was smart, he would acknowledge Sri Lanka's experience and take it as a lesson but former president Yameen wasn't so bright as he made a similar deal with China, took burdening debts to build bridges and airports and threw the Maldives under the bus.
The after-effects of the small courtship he had back then in 2017, are felt by the Maldives today as the pressure to pay back loans stacks on, the report further stated.
After Yameen's defeat in the 2018 presidential election and with President Ibu Solih attaining office, things changed drastically for the Maldives as President Ibu did a very commendable job to stabilize the situation in the Maldives.
But, on the contrary, as Rajapaksa was eyeing to enter his 3rd term of presidentship, he succumbed to defeat as mismanagement of his political assets, no concern for the public or their opinion, violation of human rights as well as suppression of democracy, the report highlighted.
Sri Lanka is facing its worst economic crisis since independence with food and fuel shortages, soaring prices and power cuts affecting a large number of the people, resulting in massive protests over the government's handling of the situation.
The economic situation has led to huge protests with demands for the resignation of Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa.
More than half a million people are on the breadline as Sri Lanka's debt has risen to 119 per cent.
Meanwhile, Maldives did not feel the blow of the damage to its maximum, despite being a tourism-based nation because President Ibu acted quickly on its crisis response plan for the tropical nation.
The IMF and the ADB report state that the Maldives will be among the five economies in the world that are expected to grow at the fastest pace in 2022.
Sri Lanka's economy, which is closest to the Maldives, has fallen into a state of disrepair, according to economic experts. However, if the Maldives government do not become cautious, the same faith will not take long to bestow upon the Maldives as the debt is already on the red line, Maldives Voice reported.
