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IMF welcomes decision to hike taxes in the Maldives

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2 years ago

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International Monetary Fund (IMF) has welcomed the decision of the Government of the Maldives to increase the Tourism and Domestic Goods and Services Tax (TGST) from 12% to 16% and Domestic Goods and Services Tax (GST) from 6% to 8% in 2023. IMF made the statement after its mission conducted a staff visit to the Maldives from June 21-29 to discuss recent economic developments, the outlook, and the country’s policy priorities.

In the statement following the conclusion of the visit, IMF stated that the economic growth of the Maldives is gathering pace, supported by a strong recovery in tourism. It noted that while tourist arrivals from Russia have declined since the start of the war in Ukraine, strong arrivals from other countries in Europe have so far more than offset this decline. As of end-June, total tourist arrivals in 2022 were only about 6% below the corresponding pre-pandemic level. The strong recovery in the tourism sector and associated spillovers to other sectors are expected to yield a solid growth of 8.7% in 2022. Inflation is projected to reach 3.1% in 2022, reflecting the partial pass-through from higher global food and energy prices due to increasing price subsidies, and spending pressures for the presidential election next year. The economic outlook is subject to significant downside risks, including an economic slowdown in key source markets for tourism and tighter global financial conditions.

Furthermore, IMF stated that fiscal vulnerabilities remain high and the fiscal deficit is expected to widen and remain in double digits in 2022, on the back of sustained high infrastructure spending and emerging spending pressures from rising subsidies, increased interest costs, and reforms of the wage bill. It stated that continued support to state-owned enterprises (SOEs), mostly through subsidies and capital contributions to repay debt contracted with sovereign guarantees, remains a key factor adding to fiscal vulnerabilities.

Additionally, IMF stated the external vulnerabilities continue to increase and that while public and publicly guaranteed debt has declined from the pandemic peak, aided by economic recovery, the Maldives remains at a high risk of debt distress, which requires further adjustment to policies. It added that dollar shortages have persisted with significant spreads in the parallel foreign exchange market. It further stated that international reserves are declining, reflecting high food and fuel prices and fiscal spending pressures, while higher external financing costs are limiting options to tap international capital markets in the near term.

IMF stated that the ongoing economic recovery provides a window of opportunity to swiftly implement needed reforms to secure fiscal and debt sustainability. It noted that critical reforms include raising domestic revenue, rationalising public spending, in particular capital spending, reducing the interest burden by limiting non-concessional borrowing, and reforming subsidies while providing targeted assistance to the most vulnerable.

IMF advised that a swift implementation of these reforms will help lower fiscal financing needs and contain pressures on the fragile reserve buffers. As such, IMF stated a swift implementation of the government’s intention to reform subsidies and reduce the dependence of SOEs on the central government’s budget would help reduce fiscal vulnerabilities.

Source: psmnews

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Nasheed to form new party

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12 months ago

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17/05/2023

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The main ruling Maldivian Democratic Party (MDP)’s leader Mohamed Nasheed has decided to form a new political party.

Nasheed initiated a separate political movement within MDP, ‘Fikuregge Dhirun’, following his loss in MDP’s presidential primary held back in January. After major conflicts with the government and its policies – all lawmakers from the faction tendered their resignation from MDP on Wednesday.

The move came after Central Henveiru MP Ali Azim was expelled from the party on Tuesday and banned from rejoining for at least one year over involvement in opposition political activities surrounding the Chagos archipelago dispute.

The 12 members who resigned from MDP on Wednesday are;

Parliament’s Deputy Speaker, North Galolhu MP Eva Abdulla
Ungoofaaru MP Mohamed Waheed (Wadde)
North Maafannu MP Imthiyaz Fahumy (Inthi)
West Henveiru MP Hassan Latheef
Hulhudhoo MP Ilyas Labeeb
North Kulhudhuffushi MP Yasir Abdul Latheef
Vilufushi MP Hassan Afeef
Central Maafannu MP Ibrahim Rasheed (Bonde)
Madaveli MP Hussain Firushan
Thoddoo MP Hassan Shiyan (Gita)
North Mahchangoalhi MP Mohamed Rasheed (Boadhigu)
Gadhdhoo MP Ahmed Zahir
All 12 members are close acquittances of Nasheed. MP Hassan Latheef, during a meeting at Bodufenvalhuge on Wednesday, announced Nasheed’s decision to form a new political party. The meeting was attended by supporters of Nasheed.

Should Nasheed form a new political party, that party would be the largest opposition party in terms of members in the parliament, thereby, the minority party. The minority party at present, opposition PPM-PNC coalition has only eight members in the parliament.

Despite the resignation of the 12 MPs, President Ibrahim Mohamed Solih continues to hold full control of the Parliament with 56 MPs.

Source(s): sun.mv

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MPs loyal to Nasheed leave MDP

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12 months ago

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17/05/2023

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Multiple members of the main ruling Maldivian Democratic Party (MDP) loyal to the party’s leader Mohamed Nasheed have left the party.

The members who resigned from MDP include 12 MPs. They include Deputy Speaker Eva Abdulla, MP Mohamed Waheed, MP Imthiyaz Fahmy (Inthi), MP Hassan Latheef, MP Ilyas Labeeb, MP Yasir Abdul Latheef, MP Hassan Afeef, MP Ibrahim Rasheed (Bonde), MP Hussain Firushan, MP Hassan Shiyan, MP Mohamed Rasheed (Boadhigu), and MP Ahmed Zahir.

They submitted their resignation letters Wednesday.

The move comes after MDP’s parliamentary group had requested action against Inthi, Hassan Latheef, Ilyas, Yasir, and Central Henveiru MP Ali Azim earlier this week, for forming an alliance with the opposition Progressive Party of Maldives (PPM), Jumhoory Party (JP) and Maldives National Party (MNP), after accusing the government of failure to protect the interests of the Maldivian people in the case lodged with the International Tribunal of the Law of the Seas (ITLOS) over the disputed maritime territory between Maldives and Mauritius.

The party’s disciplinary committee decided to expel Azim from the party on Tuesday.

They are all members of Nasheed’s ‘Fikuregge Dhirun’ faction.

However, Nasheed has yet to resign from the party.

Despite the resignation of the 12 MPs, President Ibrahim Mohamed Solih continues to hold full control of the Parliament with 56 MPs.

Source(s): sun.mv

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The Cambodian Prime Minister arrives in the Maldives on an official visit

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1 year ago

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15/01/2023

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The Prime Minister of the Kingdom of Cambodia, Samdech Akka Moha Sena Padei Techo Hun Sen, arrived Sunday morning on an official visit to the Maldives at the invitation of H.E. President Ibrahim Mohamed Solih. It is Samdech Techo Prime Minister Hun Sen’s first visit to the Maldives.

The Cambodian Prime Minister and accompanying delegation were received at Velana International Airport (VIA) by the Minister of Foreign Affairs, Abdulla Shahid (ODRI). The government will hold a ceremony on Monday to officially welcome the Cambodian Prime Minister to the Maldives.

During the visit, President Solih would meet with Samdech Techo Prime Minister Hun Sen and hold official talks on strengthening bilateral cooperation, followed by the exchange of memoranda of understanding (MoUs) between the two countries. President Solih and the Cambodian Prime Minister would also deliver a joint statement on the outcomes of their discussions.

The Maldives and Cambodia established diplomatic relations on September 21, 1995.

Source(s): President Office.

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