Government announces measures to decrease expenditure, increase revenue

The government, on Tuesday, has announced measures which will be taken to decrease state expenditure and increase state revenue in order to improve the fiscal situation of Maldives.

At a press conference held today, Finance Minister Ibrahim Ameer said that the impact on the global economy due to the COVID-19 pandemic and the Russia-Ukraine war is reflected in the Maldives.

The Minister pointed out increase in prices of goods in the global market and hike in the interest rates of loans in major economies boosting debt.

Underscoring that the impact on the world’s supply chain due to the COVID-19 pandemic has not been fully overcome yet – Minister Ameer said that impact Russia-Ukraine war adding to that to increase prices of goods in the global market is a major obstruction to Maldivian economy.

Citing these reasons, the Minister stressed that the government has been subject to take additional measures in order to decrease state expenditure and increase state revenue.

“In order to sustain our fiscal state at a sustainable level, we do need to take some measures,” he had said.

In this regard, the Minister said that the measures being proposed in this regard is a correction of GDP’s six percent.

Measures to be taken to decrease expenditure

•         Reforming subsidy
•         Decrease state-owned companies’ dependency on state budget
•         Slowing down the commencement of additional projects
•         Controlling operational costs

Measures to be taken to increase revenue

•         Raising Tourism Goods and Service Tax (TGST) from 12 percent to 16 percent
•         Raising Goods and Service Tax (GST) from 6 percent to 8 percent

The government is currently discussing with stakeholders to enforce these measures. Minister Ameer said that amendments required to enforce these measures will be sent to the parliament within this month.