The Maldivian government inherited significant external debt associated with the infrastructure spending boom under Mr Yameen. The servicing of this debt, much of which is owed to China, will keep the country's budget balance in deficit. We expect the budget deficit to narrow to the equivalent of 9.5% of GDP in 2021, from an estimated 17.8% of GDP in 2020, on account of higher govern-ment receipts (much of which will come from the tourism sector) and lower spending on public investment programmes. Grants and loans received by the Maldivian government from other countries and multilateral donors will help partially to cover the fiscal shortfall in 2021-22. However, the loans received to date will push up the country's debt/GDP ratio.