Government cannot be complacent on economic reform: Nasheed

President Mohamed Nasheed has said the government cannot be complacent in implementing economic reform, following the release of the IMF’s Country Report on the Maldives.

Speaking in his weekly radio address, President Nasheed said while the report had lauded certain financial achievements, including “painful expenditure-reducing measures including public sector wage cuts and reducing electricity subsidies,” as well as increasing the airport tax rate and proposing the draft bill on goods and services on tourism.

However although the IMF report had noted that the economy stabilised, the IMF “urges to continue with the cost cutting measures”.

The IMF had said that failure to do so would result in “large fiscal imbalances and macroeconomic instability”, Nasheed said.

The President noted that IMF’s November 2009 Public Financial Management Performance (PEFA) report had identified several failures in financial management in the previous government.

The President, pointed out that according to the IMF report, there were “significant variations between the estimated budget figures and actual revenues” leading to an unsustainable fiscal situation.

Meanwhile, he said, government debts had trebled standing at 54 percent of GDP in 2008.

Wages would increase as a result of the government’s cost-cutting measures and efforts to address failures in financial management, he explained.