The Maldives (Commonwealth Union)_ According to the World Bank, the Maldives continues to retain its position as the fastest-growing economy in South Asia, despite a slight downward revision to the growth forecast for 2023. The World Bank’s recent Maldives Development Update (MDU) for April 2023, presented at the Maldives National University, highlighted the country’s strong growth trajectory in the upcoming years.
This positive outlook is driven by factors such as increased tourist arrivals, capital spending, and private consumption, with expectations of reduced poverty levels compared to pre-pandemic times. During a panel discussion on establishing strong fiscal policies at the MDU launch ceremony, Deputy Minister of Finance Maryam Manarath emphasized the government’s strong fiscal reform measures, including the development of comprehensive targeted subsidy reform. She assured that the government’s priorities lie in protecting the most vulnerable parts of society through these reforms, with the aim of achieving fiscal sustainability.
Additionally, she emphasized the significance of investing in growth-enhancing projects, such as the Ihavandhippolhu port in the north and the Integrated Tourism Project in the South Hankede, as well as investments in connectivity and other infrastructure to foster equitable growth. These points were also highlighted in the World Bank’s Global Economic Prospects report, which projects the Maldives to become the fastest-growing country in the region due to its tourism and infrastructure investments.
Further, Chief Financial Budget Executive Ahmed Saruvash Adam elaborated on the Medium Term Revenue Strategy and the current efforts to save costs by addressing inefficiencies in the Aasandha program and broadening the tax base. Saruvash mentioned that the initial revenue consolidation target was set at 3 percent, but due to the tourism industry’s stronger-than-expected performance, the administration anticipates surpassing this figure and reducing the gap, despite some delays in subsidy reforms. He also emphasized the importance of timely investments to strengthen the country’s economy, ensuring its preparedness to tackle future fiscal commitments associated with an aging population.
In January 2023, the World Bank’s Global Economic Prospects report indicated an expected growth rate of 8.2 percent for the Maldivian economy in 2023, positioning it as the fastest-growing economy for the year. Minister of Finance Ibrahim Ameer took to Twitter to acknowledge this report, noting that it reflects the significant progress made by the Maldivian economy in overcoming the challenges posed by the Covid-19 pandemic. He also highlighted that the Maldives is among the countries that rebounded most swiftly from the pandemic’s impact. The Minister pointed out that the World Bank’s growth forecast exceeds those of the Finance Ministry and the Maldives Monetary Authority (MMA).
In October 2022, the Finance Minister remarked on the Maldivian economy’s improvement since the Covid-19 crisis, with increasing state revenue and progress in reducing the debt-to-GDP ratio. He also highlighted the administration’s plan for 2023, which aims to manage the state budget without relying on foreign grants. The Minister further emphasized that international financial institutions, including the recent Fitch Rating report, recognize the Maldives’ continued positive status.
During his fifth presidential address at the inaugural session of the People’s Majlis on February 6, 2023, President Ibrahim Mohamed Solih stated the government’s commitment to fostering a cohesive and vibrant domestic economy. He emphasized that his administration is diligently implementing and completing the necessary social, economic, and structural changes required to achieve these goals.
