Maldives Public Expenditure Review : Restoring fiscal health

How the government of Maldives chooses to spend state revenues has consequences for the country's future Decisions on what, where, how, and how much governments spend on have a significant impact on a country's growth and development. Allocating resources efficiently and effectively across atolls can ensure that all Maldivians, no matter where they live, have good access to services. The Maldives Public Expenditure Review (MPER) aims to help the government identify reforms to reduce fiscal and debt vulnerabilities and thus ensure a more secure, sustainable, and inclusive future. Although Maldives has bounced back strongly from the Coronavirus (COVID-19) pandemic, the shock has illuminated longstanding vulnerabilities in the tourism-dependent economy. With public and publicly guaranteed debt at unprecedented levels, any sudden stop in external financing and/or a materialization of fiscal risks, such as from natural disasters, climate change, or a bailout of state-owned enterprises (SOEs) could lead to a costly and sudden macroeconomic crisis. To avoid such a situation in Maldives, the MPER recommends policy actions in several expenditure areas, namely: (i) public infrastructure, (ii) health, (iii) SOEs, (iv) public housing, (v) the public sector wage bill and (vi) pensions