The World Bank has issued a report saying the Maldives was on the verge of economic collapse in 2008 when President Mohamed Nasheed’s government was elected, reports Miadhu.
According to the report, before the 2009 presidential elections, the Maldives was headed towards an economic crisis similar to that of Zimbabwe. The World Bank said the economic difficulties the country was facing was due to the previous government’s reckless fiscal discipline.
In late 2008 the country’s Gross Domestic Product (GDP) fell by almost 5 percent, while the government’s expenditure rose to almost 30 percent of the country’s income.
Adding to the previous administration’s increase in spending in their last two years in government, 50 percent of the state’s wage bill was going to civil servant salaries.
When the new government took over, the country’s debt stood at 110 percent of GDP according to Minister of Foreign Affairs Dr Ahmed Shaheed.
The International Monetary Fund (IMF) and the World Bank have made recommendations to President Nasheed’s administration on how to reduce the debt in a responsible manner, and the government has been implementing these recommendations.