Press Release No. 09/287

Press Release: IMF Announces Staff-Level Agreement with Maldives on Stand-By Arrangement

August 20, 2009

An International Monetary Fund (IMF) mission headed by Mr. Jeremy Carter of Asia and Pacific Department issued the following statement today in Male:

“An IMF staff mission has reached mission-level agreement with the Maldivian authorities on an economic program that could be supported by Fund resources of SDR 41 million (about US$60 million) under a requested 30-month Stand-By Arrangement.

“Maldives is facing a difficult economic and fiscal situation. The global economic crisis has hit the Maldives’ key tourism and tourism-related industries hard. As a result, the economy is in recession and fiscal revenue has fallen sharply. Exacerbated by very large increases in public expenditure, there has been a severe deterioration in the country’s fiscal and external accounts since 2004.

“The Government of Maldives is embarking on significant measures to stabilize the economy. The government has put together a strong macroeconomic program, built on three key elements:

(i) reducing public spending to bring the public finances back to a sustainable footing, through a restructuring of wages, allowances, and the government payroll, and cuts in other expenses;

(ii) tightening monetary policy, including by halting financing from the Maldives Monetary Authority to the central government; and

(iii) strengthening the health of the financial sector.

“A key objective of the program will be to protect the poor and vulnerable sectors of the population from the current economic hardship and the consequences of the required policy measures.

“The Government’s strong commitment to macroeconomic stability and to restoring sustainable and equitable growth merits the support of the international community. Upon the approval of IMF management, the program will be submitted to the Executive Board for aproval.”