The International Monetary Fund (IMF) has conveyed their commendation on the economic measures being taken by the Maldives. IMF delegation made the remarks during a meeting held with the Parliamentary Committee on Public Accounts and the Committee on Economic Affairs.
Briefing Parliament Members on the economic situation in Maldives, Tidiane Kinda, head of the IMF delegation, said the economy will improve this year and the economic situation currently is good. However, the challenges facing the global economy will also affect Maldives, he said.
Kinda noted the challenges faced by all countries due to high global inflation due to global price hikes following the Russia-Ukraine conflict. He highlighted the government’s efforts to control prices using subsidies have kept inflation in the Maldives 3% lower than the global average. However, he noted the measure is not sustainable in the long run, and government needs to further decrease spending to compensate.
IMF commended the decision to increase GST and TGST, and advised the government to target subsidies for those in need.
In addition, Kinda noted Maldives’ economy has been sustained by the success of the tourism sector, and commended the Maldives’ efforts to change source market due to Ukraine conflict. Therefore, he forecasts Maldives’ GDP growth to be between 9% and 10% this year. IMF noted that Maldives has recovered 95% of the pre-pandemic figures thanks to its strong policies in tourism, an improvement not achieved by other countries in the industry.
With the IMF forecasting further shocks to the global economic situation in the coming days, the delegation noted that difficult times lie ahead and expressed concern over Maldives’ growing debt and budget deficit. In addition, the IMF recommends that the private sector should be increased in some areas, noting the high expenditures of state owned enterprises.
The IMF delegation is visiting Maldives from September 12 to 26 as part of its efforts to assess the economic situation of its member countries. The IMF also clarified the concerns of the committee members about the economy during the joint meeting with the two parliamentary committees.