Key investments to shift the country’s Production Possibilities Frontier were made over the past 5 years.
A total sum of MVR 79 billion was spent as Recurrent Expenditure over the last 5 years. MVR 41 billion was spent as Capital Expenditure. About MVR 25 billion of the total capital expenditure was spent on PSIP projects. This is the largest capital investment made in a single presidential term in the history of Maldives.
An average growth of 6.4% was maintained over the past five years, indicating the efficiency and success of the Fiscal and Macroeconomic policy of the government.
According to the latest forecasts, the Maldivian economy is expected to grow by 7.6% in 2018. The real GDP of Maldives has increased from MVR 53 billion to MVR 72 billion from 2013 to 2018. This indicates a 36% growth in the size of the economy within a relatively short period of time.
Over the past 5 years, the Gross International Reserve has nearly doubled.
Most of the extensive economic development in the Maldives are driven by the tourism and construction sectors.
The Maldivian economy is expected to grow by 6.8% in 2019. According to the latest IMF forecasts, the average growth of the world would be at 3.8%, while the growth of emerging and developing economies are expected to be at 5%. Current forecasts also indicate that the world’s economic growth would remain at 3.8% in 2019.
In the year 2018, the economy underwent periods of deflation, indicating that the overall commodity prices have fallen. The average inflation rate in 2019 is forecasted at 0.1%.
The 2017 was the second time in five years in which the budget deficit was lower than 3.5% of GDP.
The revised expenditure for the year 2018 is MVR 25.8 billion. The amount comes up to MVR 27.9 billion after loan repayments of MVR 2.1 billion.
During the past 5 years, a total sum of MVR 25 billion have been spent on PSIP development projects.
Velana international airport project is one of the most notable projects within the past 5 years. With its newly constructed runway, it has the capacity to land large aircrafts such as the A380.
Water and sewerage projects carried out in the atolls is an important investment for the betterment of the islanders, as well as the prosperity of the guesthouse industry. Linking Male’ and Hulhumale’ via the SinaMale’ is an essential infrastructural development needed to solve the congestion in Male’. It also resulted in more business opportunities and adds value to land price of Hulhumale’. Social housing projects such as the “Hiyaa” project is the solution to housing and other social problems. Dharumavantha Hospital will help to reduce the outflow of dollars spent abroad for medical purposes.
While a total of MVR 25 billion has been spent on development programs, the national debt have increased by MVR 23 billion. By the end of this year the total national debt is estimated to be at MVR 48.6 billion which is 58.9% of the GDP. During the year 2013, the national debt was 28.4 billion MVR. This increase is due to the financial investment on completed and ongoing projects. Upon completion of these projects, the government revenue is expected to increase, increasing the ability to repay the debt.
First Sovereign Fund established In Maldives - Sovereign Development Fund, in which, as of October, a total of 90 Million USD has been deposited to this fund.
The total budget for the fiscal year 2019 is 29,647,415,773.
From the total budget, the expenditure is expected to be 26.7 billion MVR. The expenditure amount excludes MVR 2.9 billion allocated for loan repayment. 23. In order to achieve the expected results from the budget, it is important to refine the Public Financial Management of the government.
The World Bank has generously provided an additional $12 million for the public finance management reform project.
Amendments to the public finance legislation have already been drafted.
Budget formulation using the BPC module of the Public Accounting Software (SAP) resulted in a more efficient budget process and made the management of cash flow easier.
The “Ba’ndeyri Portal” which was inaugurated by the Ministry of Finance and Treasury has made the process of managing the budget more efficient. The e-procurement system, “Beelan Portal” was also introduced this year. Furthermore, “Neelan Portal” was introduced to enable public auctioning of capital goods unwanted by government authorities, making this process more transparent.
Research has been conducted to refine the tax policy in order to bring necessary changes to the tax system. The Ministry of Finance and Treasury will also set up a Tax policy unit next year to conduct further research and harmonize the taxation system.
Establishment of the National Pay Commission will help the government allocate wages and pension more efficiently.
Research conducted by World Bank and Ministry of Finance and Treasury shows that government spending on the health sector including Aasandha doubled over the past five years. Precautionary measures need to be undertaken before it becomes difficult to control.
Public Investment Management Assessment conducted by IMF and Ministry of Finance and Treasury has shown three sectors that need improvement in the Public Sector Investment Program. This includes the planning, resource allocation and mobilization stages of project implementation.
It is also important for the State Owned Enterprises to become less dependent on the government’s budget. However, the dividend earned by the government has doubled during the past 5 years.
Maldives issued its first bond in the international market during the last two years.
A credit rating has been issued for the first time in Maldives in 2016. Maldives has maintained a credit rating of B2 by MOODYS and B+ by Fitch.
Introduction of the Sovereign Development Fund will reduce the debt borrowing risks and obstacles significantly.
The main basis of the national development and fiscal strategy should be the UN Sustainable Development Goals.
Since private sector is the main driving force of the Maldivian economy, there needs to be more effort to boost the economic activities of the private sector by providing more support to SMEs.
I sincerely thank President Abdulla Yameen Abdul Gayyoom for the development he has achieved during his five year tenure.