Monday 22nd Jul 2024
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President Solih

How President Solih Drove the Nation to Bankruptcy

Malé – When President Ibrahim Mohamed Solih assumed office, the Maldivian economy was in good shape. The total internal and external debt stood at around MVR 62 billion. The previous administration of President Abdulla Yameen had even created a sovereign wealth fund to manage and pay off external debt. However, the financial stability of the nation took a drastic turn during Solih’s tenure, marked by widespread corruption and mismanagement.
Upon taking office, President Solih’s government engaged in multiple corruption scandals. Billions in loans were taken from India, and these funds were funneled into wasteful projects that benefited the cronies of the ruling elite. A prime example is the development of new offices for FENAKA, a state-owned company responsible for providing electricity. Despite not needing such facilities to perform its services, millions were spent on these unnecessary constructions, wasting public funds.

Another significant misuse of resources was observed in the development of multipurpose halls in various small schools, which did not require such infrastructure. These projects were merely avenues to siphon off money. Additionally, the government gave over MVR 1 billion in compensation to companies affiliated with the Maldivian Democratic Party (MDP).

The government's financial mismanagement extended to its day-to-day operations, which were run through monetary financing—essentially printing money. This led to rampant inflation and a severe decline in the value of the Maldivian rufiyaa. Furthermore, the government appointed hundreds of political appointees and thousands of employees in state-owned companies, exacerbating the fiscal deficit.

By the end of President Solih's term, the nation's debt had skyrocketed to MVR 120 billion, a record high in Maldivian history. This unprecedented increase in debt occurred despite continuous advisories from the World Bank and the International Monetary Fund (IMF) to cut down on spending, streamline subsidies, and cease monetary financing. Unfortunately, these recommendations were ignored, leading to the current economic crisis.

The mismanagement and corruption under President Solih’s administration have left the Maldives grappling with an enormous debt burden, casting a long shadow over the nation's economic future.