Maldives could face Sri Lanka-like economic crisis if not careful about taking out loans: report
The Maldives and Sri Lanka – two countries whose economies are heavily dependent on tourism – have suffered a severe blow due to regulations imposed by COVID after the outbreak of the pandemic. Two years after the pandemic, the Maldives’ economy has rebounded and is doing extremely well compared to Sri Lanka which is struggling with its worst economic crisis in four decades.
Both nations have been heavily indulging in borrowing money from foreign countries, especially China. Sri Lanka had a head start when it came to dating 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 , Maldives Voice reported. If one was smart he would recognize Sri Lanka’s experience and take it as a lesson, but former President Yameen was not so bright that he struck a similar deal with China, ran up debts heavy to build bridges and airports and threw the Maldives under the bus. .
The aftermath of the little courtship he had then in 2017 is being felt by the Maldives today as pressure to repay loans mounts, the report says. After the defeat of Yameen in the 2018 presidential election and the coming to power of President Ibu Solih, things have changed drastically for the Maldives as President Ibu has done a very commendable job in stabilizing the situation in the Maldives.
But, on the contrary, as Rajapaksa was planning to start his 3rd presidential term, he succumbed to defeat due to mismanagement of his political assets, lack of interest in the public or his opinion, violation of human rights as well as the 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 large numbers of people, leading to massive protests over the handling of the situation by the government.
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 at risk as Sri Lanka’s debt hits 119%.
Meanwhile, the Maldives did not feel the brunt of the maximum damage despite being a tourism-based nation as President Ibu acted swiftly on his crisis response plan for the tropical nation. . The IMF and AfDB report indicates that the Maldives will be among the world’s five fastest growing economies in 2022.
The economy of Sri Lanka, which is closest to the Maldives, has fallen into a state of disrepair, according to economic experts. However, if the Maldivian government does not become cautious, the same faith will soon be given to the Maldives as the debt is already on the red line, Maldives Voice reported. (ANI)
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)