A sultanate since the 12th century, the Maldives became a British protectorate in 1887. It became a republic in 1968, three years after independence. President Maumoon Abdul GAYOOM dominated the islands' political scene for 30 years, elected to six successive terms by single-party referendums. Following political demonstrations in the capital Male in August 2003, GAYOOM and his government pledged to embark upon a process of liberalization and democratic reforms, including a more representative political system and expanded political freedoms. Political parties were legalized in 2005.
Southern Asia, group of atolls in the Indian Ocean, south-southwest of India
Population - distribution
about a third of the population lives in the centrally located capital city of Male and almost a tenth in southern Addu City; the remainder of the populace is spread over the 200 or so populated islands of the archipelago
Dhivehi (official, dialect of Sinhala, script derived from Arabic), English (spoken by most government officials)
MALE (capital) 156,000 (2014)
- Conventional long form
- Republic of Maldives
- Conventional short form
- Local long form
- Dhivehi Raajjeyge Jumhooriyyaa
- Local short form
- Dhivehi Raajje
- Geographic coordinates
- 4 10 N, 73 30 E
- Time difference
- UTC+5 (10 hours ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; accepts ICCt jurisdiction
Maldives has quickly become a middle-income country, driven by the rapid growth of its tourism and fisheries sectors, but the country still contends with a large and growing fiscal deficit. Economic growth slowed to 2.8% in 2015, mainly because of a decline in tourists from China and Russia. Despite lower growth, tourism-related tax receipts increased by 13% in 2015 because of higher tax rates. This increase in tax receipts led to higher usable foreign exchange reserves that helped partially fund increases in construction related imports.
- External debt stocks
- US$ 943,017,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -325,699,751
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 3,197,300,305
- Exports of goods and services
- US$ 3,367,100,023
- Total Merchandise Trade
- FDI, net inflows
- US$ 298,720,360
- Commercial Service Exports
- US$ 2,893,996,901
coconuts, corn, sweet potatoes; fish
tourism, fish processing, shipping, boat building, coconut processing, woven mats, rope, handicrafts, coral and sand mining
- Thailand 17.4%, France 11.7%, Germany 10.3%, US 9.3%, Sri Lanka 8.5%, Italy 6.6%, UK 6.2%, Japan 4.5% (2015)
- petroleum products, clothing, intermediate and capital goods
- UAE 18.1%, Singapore 13.6%, China 10.5%, India 10.3%, Malaysia 6.9%, Thailand 4.9%, Sri Lanka 4.7% (2015)
- Country Risk Rating
- A high-risk political and economic situation and an often very difficult business environment can have a very significant impact on corporate payment behavior. Corporate default probability is very high.
- Business Climate Rating
- The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Intercompany transactions run major risks in the difficult environments rated C.
- Growing bilateral relations with China
- Tourism potential of the uninhabited atolls
- Airport infrastructures
- Supported by the World Bank and the Asian Development Bank (ADB)
- Dependence on international economic cycle due to poor economic diversification
- Chronic budget deficit and growing momentum of public debt
- Political instability
- Vulnerable to natural disasters and adverse effects of climate change
In 2017, economic growth, which is highly dependent on tourism (24% of GDP) is expected to continue the recovery begun in 2016. Economic activity will be driven particularly by the growth in the number of European tourist visitors, which will help offset the drop in visitors from Russia and China. The strong tourism performance will be buoyed by massive infrastructure investment and the opening of new facilities. Three projects costing around 35% of GDP are planned over the next three years, including, in particular, increased capacity at Malé airport, which should make it possible to cope with the rise in tourist numbers. These projects should also impact positively on related sectors: transport, communications and construction. The latter (9% of GDP), supported by public and foreign investment, is projected to continue to grow more strongly after years of slow growth between 2009 and 2014. Fishing, an important provider of jobs on the Archipelago, remains antiquated. Moreover, the Maldives will continue to benefit from the support of international aids, especially China, to develop the Archipelago based on infrastructure and tourism projects.
Inflation is projected to rise in 2017 as a result of the slight increase in oil prices and in household consumption.
The public investment program is expected to increase the fiscal deficit in 2017. The increase is explained by the pressure of current spending (+300% over the past ten years) for example higher civil service wage costs, welfare payments and social subsidies. Although the government is proposing to cut these current spending items, this will not offset the extra spending on infrastructure investment to boost growth and support the process of ecological transition. The main revenue source is likely to be the new USD25 tax on all passengers leaving from Ibrahim Nasir International Airport. Higher duties on cigarettes and fizzy drinks should also help increase income. Despite these measures, anticipated revenues appear, as in 2016, overestimated. The persistence of the deficit will put the public debt on an upward trajectory to reach a worrying level. Without any budgetary measures, the debt could even become unsustainable.
The current account deficit will continue to deepen. The country's geographic isolation means it still has to import massively, which puts a burden on the trade balance (trade in goods). Imports are expected to climb with growing demand for construction material needed for the new investment projects. Exports, mainly of fish, will remain weak. Tourism income, which is an item on the services balance, will provide the main positive contribution to the current account balance. With some 100,000 expatriates (officially) on the island with a population of 340,000, net flows of current transfers will also remain in deficit. As a result, the Archipelago has a significant external financing needs which means the country depends on international donors. However, the foreign exchange reserves are holding up (equivalent to 3-4 months of imports in 2016) thanks to tourism growth and considerable flows of FDIs. Both these sources help reduce the pressure on the Maldivian currency and, in turn, the foreign exchange risk. The situation could however rapidly deteriorate if the dynamism of the tourism sector were to decline (for example, because of a worsening security situation).
Since the election in 2013 of President Abdullah Yameen, half-brother of former President Gayoom (Head of State from 1978 to 2008), democracy seems to be increasingly fragile, Several arrests have been made including the arrest and sentencing to 13 years in prison of former President Mohamed Nasheed, well-known opponent of the current president, who has now been given asylum in the United Kingdom. These arbitrary arrests provoked a great many popular demonstrations which were firmly suppressed. In summer 2016, Abdullah Yameen's government introduced additional restrictions on demonstrations and political acts deemed to insult Islam, giving the President de facto the tools to suppress all dissent. Opposition could, however, come from within his own camp: Maumoon Gayoomseems to want to distance himself from his half-brother and, for the moment, is refusing to support Yameen's bid for a second presidential term in 2018, despite the court's decisions against him, including the decision to remove him from the presidency of the Progressive Party of Maldives.
The Archipelago of Maldives, threatened with suspension by the Commonwealth, decided in October 2016 to leave the intergovernmental organization. Meanwhile, the country is becoming increasingly Islamized with many Maldivians choosing to join the ranks of the Islamic State. While tourist facilities have thus far been spared, disaffection with this country as a destination cannot be ruled out if the security situation deteriorates. Corruption and the regime's growing authoritarianism could also dissuade FDIs, which represent 10% of GDP. Accordingly, the Archipelago suffers from a very poor business climate, and is ranked 135th out of 190 in the World Bank's 2017 Ease of Doing Business Index.