The government inherited significant external debt associated with the Maldives' infrastructure spending boom under Mr Yameen. The servicing of this debt is one of the prime reasons for the country's persistent budget deficits. Increased expenditure will be required in 2020 to offset the loss of revenue from tourism, resulting from restrictions imposed on foreign tourist arrivals to stop the spread of the virus. Moreover, a recession this year will suppress revenue collection, which will lead to an increase in the deficit. We expect the budget deficit to widen to the equivalent of 7.8% of GDP in 2020 from an estimated 5.5% of GDP in 2019. The shortfall in the budget will narrow slightly in 2021, partly on account of higher government receipts as the economy stages a recovery. Grants and loans received by the Maldivian government from other countries and multilateral donors will help to partially cover the fiscal shortfall. However the loans received to date will push up the country's debt/GDP ratio.