Business

High debt limits Maldives’ ability to absorb further shocks

Published

7 months ago

07/10/2023

The World Bank warns that Maldives’ debt servicing is expected to surpass USD 1 billion in 2026, limiting the country’s ability to absorb further shocks to public finances.

In its twice-a-year update on Maldives’ development released last week, the World Bank said that the real GDP is expected to grow by 6.5 percent in 2023, with an average growth of 5.4 percent from 2024 to 2025.

But challenges lie ahead, with growing external and fiscal vulnerabilities posing risks to the economy, particularly if Maldives continues to borrow at high costs during a global economic slowdown, warned the global financial institute.

Although fiscal deficits are expected to gradually narrow over the medium term, total PPG debt to GDP is forecast to remain elevated at over 115 percent.

The World Bank said that while the government’s decision to raise the GST rates was a positive start, it falls short of the adjustment that is required.

A stronger commitment is urgently needed, as the planned subsidy reforms didn’t happen in 2023, said the institution.

The World Bank said that public and publicly guaranteed external debt servicing is expected to reach USD 1.07 billion in 2026, which includes bullet payments for the USD 500 million Sukuk and USD 100 million private placement – significantly testing the country’s ability to repay or roll over this debt.

“Such high levels of public debt, and associated refinancing risks, make the Maldivian economy extremely vulnerable to domestic and external shocks,” warned the institution.

It warned that mobilization of additional debt at non-concessional terms would further exacerbate these vulnerabilities.

“Thus, despite robust growth prospects, prudent debt management remains a top priority for improving fiscal sustainability, lowering the cost of growth-enhancing investments – especially with large debt service obligations coming due – and ensuring a more resilient economy going forward,” said the World Bank.

The financial institute warned that a strong fiscal adjustment is urgently required to replenish fiscal buffers against future shocks, given the high risk of debt distress.

Source(s): sun.mv

Business

CWEIC office to establish in Maldives, Janah as Chair

Published

2 days ago

16/05/2024

Commonwealth Enterprise and Investment Council (CWEIC) has announced decision to establish its office in the Maldives, and appoint President Dr. Mohamed Muizzu’s Principal Advisor Mohamed Ali Janah as its Country Chair.

CWEIC in a statement on Thursday, said the office will be established to connect the Maldives government with international investors and businesses.

The Maldives hub office of CWEIC will play a vital role in seeking prospective investment opportunities from all 56-member nations of the Commonwealth. The office will also enhance strategic alliances and partnerships between these countries and the Maldivian government.

Veteran entrepreneur, Janah boasts of over 30 years of business relations with the Middle East.

Source(s): sun.mv

Business

Dubai company awarded the development of SEZ

Published

6 days ago

12/05/2024

An agreement has been signed by the Maldivian administration with UAE’s International Free Zone Authority (IFZA) to develop Special Economic Zones (SEZ) in the Maldives.

The agreement, officially co-signed by Minister of Economic Development and Trade Mohamed Saeed and IFZA Chairman Martin Gregers Pedersen during a special ceremony, marks a significant milestone in economic development.

Speaking at the ceremony, Minister Saeed emphasized the timeline for finalizing the agreement, committing to reach a consensus within the next four months. As part of the agreement, Fonadhoo in Kaafu Atoll will be transformed into a financial hub, featuring a new financial center and a bridge connecting Male’ and Hulhule. IFZA will bear the expenses for these developments.

The Ministry of Economic Development and Trade further highlighted plans for the Economic Gateway project in Ihavandhippolhu, aiming to attract investors with IFZA’s expertise. Addressing the attendees, Chairman Pedersen expressed confidence in the success of the project, underscoring collaborations with investors to further enhance opportunities in the Maldives.

The development of SEZs remarkably aligns with the President Dr. Mohamed Muizzu’s vision to diversify the economy and stimulate financial growth. The Maldivian administration is optimistic about attracting future investments and positioning the country as a desirable destination for business opportunities.

Source(s): PsmNews

Business

Over USD 713M generated attributing to revenue increasing by 3.7%

Published

7 days ago

11/05/2024

Ministry of Finance has revealed a remarkable surge in the government’s revenue generated as of April 25, which exceeds USD713 million. The latest weekly fiscal report publicised by the ministry indicates that this contributes to a 3.7% increase in revenue in comparison to the revenue of USD693 million, generated within the same period, in 2023.

The fiscal report shows that the revenue comprises USD 596 million in tax revenue, USD116 million in non-tax revenue, and USD3 million in aid received. Tax earnings include import duty, business and property tax (BPT), goods and services tax (GST), as well as earnings from GST. The breakdown of revenue generation includes USD45 million from import duties, USD168 million from BPT, USD330 million from GST, USD24 million from green tax, USD22.6 million from airport service charges, and departure tax.

Expenditures until April 25 totalled USD817 million, with USD629 million allocated to recurrent expenses and USD181 million to capital expenditures. This represents a significant reduction in expenditures compared to the USD244 million spent by the government in 2023, during the corresponding timeframe. Recurrent expenses cover USD207 million for salaries and allowances and USD408 million for administrative work. Meanwhile, capital expenditure primarily encompasses expenses related to structural development.

Source(s): PsmNews