Fayyaz Warns of Economic Instability Without Clear Debt Plan

Former minister Fayyaz Ismail has warned that the Maldives could be heading toward serious economic instability, accusing the government of failing to plan or communicate clearly on its growing debt obligations.

In a series of posts on X, Fayyaz said the current administration inherited a recovering economy with rising revenues and strong tourism growth, “a time when debt should have been coming down.” He contrasted this with the COVID-19 period, when the previous government was forced to borrow after tourism collapsed and state revenue fell by more than MVR 25 billion. “The MDP government had no choice but to borrow during the covid period to plug a MVR 25 billion+ loss in state revenue,” he said.

Fayyaz argued that today’s borrowing is being driven by political priorities rather than productive investment. “Debt today is being used to satisfy political whims,” he wrote, warning that despite heavy spending, “many islands have seen little real economic benefit,” while “the entire SME sector is crumbling.”

He raised particular concern over the USD 500 million sovereign Sukuk maturing in April, questioning whether the government has a refinancing plan. “Does the government have a plan? Are they worried about it? Or are they so confident that they are not bothered to be transparent?” he asked, warning that silence could lead to a “dangerous scramble” involving high-interest borrowing, depletion of reserves, and loss of investor confidence.

Ismail cautioned that without clear answers, the country risks sliding toward hardship. “This is not debt management by any means, but a clear absence of planning,” he said, calling on the government to be transparent about whether the Maldives is heading toward “imminent economic collapse or a safe harbour and prosperity.”