News

The economy has major challenges, debt and expenditure have caused a huge loss to the Maldivian economy

Published

6 months ago

23/11/2023

The World Bank warned on Wednesday that the Maldives faces significant fiscal challenges, and having failed to achieve its targets to reduce fiscal deficits, the national debt is projected to hover above 115 percent of GDP over the medium term.

It its latest Maldives Development Update, the World Bank said the Maldives faces significant economic risks from rising spending, high debt and external shocks, despite a projected 6.5 percent growth in real GDP in 2023, and an average of 5.4 percent from 2024 to 2025.

Launched last month, Batten Down the Hatches, was the subject of an event on Wednesday organized by the World Bank and the Maldives National University (MNU).

The report offers a cautiously optimistic forecast for the Maldives’ economic trajectory, anchored by the robust performance of the tourism industry.

However, the country faces significant fiscal challenges, exacerbated by global commodity price surges, escalated government expenditure on capital projects and subsidies, and the central bank’s ongoing budget deficit financing.

The world bank warned that these issues require immediate and decisive fiscal reforms, including better management practices for public investment, moving toward targeted subsidies, increasing revenues, prudent debt management for a meaningful fiscal adjustment.

While Maldives had plans to reduce fiscal deficits, the country has failed to achieve its targets so far and national debt is projected to hover above 115 percent of GDP over the medium term.

The World Bank said that though the government increased Goods and Services Tax (GST) rates earlier this year, yet more decisive and prompt actions are required, particularly on the expenditure side, as the expected subsidy reforms for 2023 have been delayed.

“For fiscal prudence, Maldives must urgently refine its expenditure strategy and enhance revenue generation,” said the institution.

The World Bank recommended essential reforms, including:

Overhauling the Aasandha national health insurance program
Rationalizing budgetary contributions for state-owned enterprises, particularly in the energy and food sectors
Moving towards targeted subsidies
Establishing a robust public investment framework to ensure orderly and strategic infrastructure development
On revenue enhancement, the World Bank recommended that immediate efforts should concentrate on:

Expanding the tax base
Leveraging domestic revenue streams
Promoting equitable taxation
Faris H. Hadad-Zervos, the World Bank Country Director for Maldives, Nepal and Sri Lanka, said that while Maldives has shown remarkable resilience and recovering from the Covid-19 pandemic, it will need to remain vigilant in the face of new and emerging shocks such as conflicts around the world, price volatilities in global markets, and high inflation affecting the disposable income of people in major tourist markets.

“There is an urgent need to address the country’s fiscal and external vulnerabilities, especially through prudent debt management and expenditure reform measures, and develop a sustainable and resilient infrastructure investment framework, to ensure long-term growth and prosperity for its people,” he added.

The World Bank said the Maldives has achieved remarkable results in basic infrastructure services, outperforming many of its neighbors and other Small Island Developing States.

However, as a result of rising infrastructure spending, public debt sharply increased, especially during the Covid-19 crisis – subjecting Maldives to major fiscal vulnerabilities.

There are still big gaps in infrastructure access between the capital Male’ City and the outer atolls, where many people lack services like piped water, sewage, and broadband internet.

Maldives is trying to close these gaps, but the country faces many challenges common to Small Island Developing States like the worsening impacts of climate change and limited fiscal space.

“To improve, Maldives needs to take into account the high public debt reality, carefully and orderly plan for investments, and coordinate better among different ministries and agencies, especially for projects that involve multiple sectors,” said the World Bank. “The country also needs to prioritize sustainability and resilience, given its exposure to climate change.”

Source(s): sun.mv

News

Technical Chinese team to assist in 5M tree planting programme

Published

2 hours ago

19/05/2024

The Ambassador of China to the Maldives Wang Lixin has affirmed that a technical team of China will visit the Maldives to conduct a soil analysis, prior to the commencement of the five million tree planting programme.

Addressing the media, Ambassador Lixin stated that the Ministry of Climate Change, Environment and Energy is engaged in collaborative efforts with the Chinese company, Fujian Forestry Administration regarding the programme. The ambassador further disclosed that the technical team will conduct a comprehensive study on the soil and will identify and elucidate the various types of plants which can be cultivated in the Maldives easily.

President Dr. Mohamed Muizzu has announced the national initiative to plant five million trees across the country at the high-level segment of the Twenty-Eighth Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) in Dubai.

The programme will commence annually on June 5, commemorating World Environment Day. Trees will be planted in all residential islands and resorts under the programme. The administration previously revealed that neighbouring nations will be contributing trees to the initiative.

Source(s): PsmNews

World

Israeli army continues attack on Gaza’s Jabalia camp

Published

2 hours ago

19/05/2024

The Israeli army on Saturday continued its attack on Jabalia in northern Gaza, urging residents in the area to evacuate their homes and head to shelters in western Gaza.

Army spokesperson Avichay Adraee said in a statement on social media platform X that the army eliminated “a sabotage cell in Jabalia after clashes with its members inside buildings, where the saboteurs fled to the roof and opened fire on the army forces.”

Adraee said the troops surrounded the buildings and eliminated the group after an exchange of fire, noting that the army did not suffer any losses during the clashes.

The spokesperson did not provide further details about the identity of the “saboteurs.”

Earlier in the day, Palestinian medical sources said at least 28 people, including women and children, were killed in continuous Israeli raids on the Jabalia refugee camp.

Israeli warplanes targeted several residential houses and a shelter center for displaced people in the camp with missiles, according to Xinhua, citing Palestinian security sources.

The Palestinian death toll from the ongoing Israeli attacks on the Gaza Strip has risen to 35,386, health authorities in the Palestinian enclave said in a press statement on Saturday.

The raids caused large explosions in the camp, which had been witnessing a military operation for several days.

The Israel Defense Forces (IDF) have killed more than 130 militants in targeted operations in eastern Rafah in the southern Gaza Strip, according to a statement issued on Saturday.

As part of the operations, the Givati infantry brigade killed more than 80 militants in the area and located dozens of rifles, grenades, and ammunition, according to the IDF statement.

Givati’s reconnaissance unit also uncovered significant underground tunnel infrastructure in the area, it said.

Simultaneously, the 401st armored brigade killed about 50 militants in raids on Hamas infrastructure and buildings from which gunfire was shot at IDF troops and located dozens of tunnel shafts and many anti-aircraft guns.

“So far, hundreds of terrorist infrastructure sites have been destroyed by the 401st brigade, including weapons production facilities and ready-to-use launch sites,” the IDF said.

New divisions emerge

New divisions have emerged among Israel’s leaders over post-war Gaza’s governance, with an unexpected Hamas fightback in parts of the Palestinian territory, piling pressure onto Israeli Prime Minister Benjamin Netanyahu, AFP reports.

Netanyahu came under personal attack on Saturday from war cabinet minister Benny Gantz, who threatened to resign from the body unless the premier approved a post-war plan for the Gaza Strip.

Earlier in the week, Defence Minister Yoav Gallant slammed Netanyahu for failing to rule out an Israeli government in Gaza after the war.

The prime minister’s outright rejection of post-war Palestinian leadership in Gaza has broken wide open a rift among top politicians and also frustrated relations with top ally the United States, the AFP report said.

Experts say the lack of clarity only serves to benefit Hamas, whose leader has insisted no new authority can be established in the territory without its involvement.

Gantz said Saturday that the war cabinet needed to draft and approve a broad range of plans within three weeks, including the formation of an “American, European, Arab and Palestinian administration that will manage civilian affairs in the Gaza Strip,” according to the AFP report.

Washington had previously called for a “revitalized” form of the Palestinian Authority to govern Gaza after the war. But Netanyahu has rejected any role for the Palestinian Authority in post-war Gaza, saying on Thursday that it “supports terror, educates terror, finances terror.”

Instead, Netanyahu has clung to his steadfast aim of “eliminating” Hamas, asserting that “there’s no alternative to military victory.”

Source(s): CGTN

News

Developmental projects of Maldives progressing substantially

Published

1 day ago

18/05/2024

India’s Minister of External Affairs Dr. S. Jaishankar has affirmed that the developmental projects of the Maldives carried out with the assistance of India have been progressing considerably. The remarks were made by the minister during the Confederation of Indian Industry (CIIs) Annual Business Summit.

Speaking at the summit, Minister Jaishankar stated that some developmental projects were slightly politically influenced, hindering the progress. However, he assured that the progress of the projects have propelled at a notable rate.

Following the Minister of Foreign Affairs Moosa Zameer’s official visit to India at the invitation of Minister Jaishankar, discussions were held highlighting the spectrum of initiatives across the nation has been kickstarted through loans and grants from the Government of India during the previous administration. He emphasised the current government’s commitment to prioritising the resumption and completion of these projects.

Meanwhile, the Government of India has reaffirmed its commitment to the development and prosperity of the Maldives by extending a budgetary support of USD 50 million to be repaid within a term of one year.

Source(s): PsmNews