Development Policy Credit

closed

This Economic Stabilization and Recovery Program for Maldives supports the new Government's program to stabilize the economy and puts in place some of the key elements needed for a sound recovery. It supports the Government's reforms aimed at restoring fiscal sustainability and its efforts to implement its medium-term strategic action plan (SAP). Both the financing and the policy actions supported by the operation come at a time when there are initial signs of an economic recovery and evidence that the Government's fiscal austerity measures are helping to put the fiscal deficit on a sustainable path. In this regard, the operation will underpin economic growth by helping to reduce the large macroeconomic imbalances that occurred in 2009. While the 2009 fiscal deficit is very high, fiscal austerity measures and the improving economy are beginning to slowly turn the situation around. This operation is focused on helping the Government to implement its SAP, which aims to fundamentally change the role of the state in the economy.