The bank said that institutional weaknesses in PFM were undermining the Maldive government’s capacity to undertake necessary fiscal adjustments in an efficient manner.

Subsequently, the World Bank has designed a PFM system, after the country’s government requested for external support. The project is expected to enhance budget credibility, transparency and financial reporting of central government finances.

It will also support better and more efficient usage of the existing public accounting system as a tool for better budget execution, internal control, cash management, accounting and fiscal reporting.

Francoise Clottes, World Bank country director for Sri Lanka and Maldives, said: ‘A key challenge for the country will be to ensure that the government’s social and economic goals are fully consistent with the urgent need for fiscal consolidation to restore fiscal and debt sustainability.

‘We are happy to assist the government in this endeavour with both financial and technical support.’