The World Bank has stated that the Maldives remains the fastest growing economy in South Asia, despite a minor revision downwards to the 2023 growth forecast.
According to the World Bank's latest Maldives Development Update (MDU) April 2023 launched at an event held at the Maldives National University on Sunday, the World Bank reaffirmed that the Maldives will maintain strong growth numbers in the coming years based on the latest economic projections, driven by increased tourist arrivals, capital spending, and private consumption, with poverty levels expected to be lower than before the pandemic.
Speaking at a panel discussion on developing a sound fiscal policy at the MDU launch ceremony, Deputy Minister of Finance, Maryam Manarath highlighted the Government's robust fiscal reform policies, include developing a comprehensive targeted subsidy reform.
The Deputy Minister provided reassurance that the Government will prioritize protecting the most vulnerable segments of society through these reforms to achieve fiscal sustainability. She also explained on the importance of investing in growth enhancing projects that would transform the economy like the Ihavandhippolhu port in the North, Integrated tourism project in the South Hankede, investments in connectivity and other infrastructure for equitable growth.
The Deputy Minister highlighted that this was mentioned in the World Bank's Global Economic Prospects report that Maldives is set to become the fastest growing country in the region attributing to tourism and infrastructure investments that the country is making.
She went onto say that the administration is looking at doubling the size of the country's economy through these lucrative investments, near future.
Furthermore, Chief Financial Budget Executive Ahmed Saruvash Adam explained the Medium Term Revenue Strategy and ongoing work on savings on Aasandha inefficiencies and broadening the tax base.
Saruvash stated that the revenue side consolidation target was initially 3 percent. He went onto say that because of the stronger than anticipated performance of the tourism industry, the administration expect the figure to be more and thus the gap to be less even with the delay in subsidy (expenditure side) reforms.
He also highlighted on the importance of timing, to strengthen the country's economy through investments to ensure that we are well equipped to tackle the fiscal commitments that come with an aging population in the future.
In January 2023, World Bank the Global Economic Prospective report highlighted that the country's economy is expected to see a growth of 8.2 percent in 2023. This, the report highlights is the economy projected to see the fastest growth in 2023.
Taking to twitter about the report of World Bank, Minister of Finance Ibrahim Ameer noted that this is a result of the Maldivian economy showing considerable progress in overcoming the challenges it faced due to the Covid-19 pandemic. He also highlighted that Maldives is among the countries that over came the hurdles of Covid-19 pandemic the fastest.
The Minister stated that this forecast of the World Bank is higher than that of the Finance Ministry and the Maldives Monetary Authority (MMA).
In October 2022, the Finance Minister stated that the Maldivian economy has improved since Covid-19 and that the state's revenue is improving, and that the plans to lower the debt in relation to GDP are being achieved. He also noted the administration’s plans for the year 2023 include managing the state budget without depending on foreign grants.
The Minister also highlighted the reports published by international financial institutions about the Maldives and stated that the country maintained its status in the latest Fitch Rating report.
While delivering his fifth Presidential Address, at the inaugural sitting of the People’s Majlis on 06 February 2023, President Ibrahim Mohamed Solih stated that the government aims to create a cohesive, vibrant, domestic economy. As such, he noted that this administration is implementing and completing the urgent social, economic and structural changes needed.
