Although the Maldives’ economy expanded in October, higher food and transport costs combined with the depreciating rufiyaa has bloated inflation rates to 8.3 percent, a CARE Maldives report has shown.
“Inflation during the period was mostly influenced by food index owing to the increase in prices of both fish (41.6%) and other food items (11.19%) followed by the increase in the transportation costs,” states the report.
“But this is not singular for this economy as rising prices have been witnessed across the globe,” the report contends.
Quoting a “global slowdown” in economic activity, the report suggested that international commodity prices are due to fall in coming months. The drop could temper the Maldives’ rising prices.
The recently-implemented Goods and Services Tax (GST) caused many Maldivians to note a price hike with anxiety. However, the President assured the people that further reforms scheduled for January 2012 would temper the new rates.
CARE Maldives suggested that a drop in international commodity prices would also reverse the widening trade deficit and declining reserves of foreign currency. Gross international reserves declined by approximately US$27 million between December 2010 and September 2011.
Statistics show an increase of US$33.2 million in reserves to date compared with August 2010, the report claims.
CARE estimates that the fiscal deficit will remain at 11 percent of the GDP; total revenue is expected to increase from 23 percent of GDP to 29 percent by the end of the year.
Meanwhile, total expenditure continues to surpass revenue. Records indicate a four percent increase from 37 percent of GDP in 2010 to 41 percent in 2011, primarily due to growing government salaries.
“The increase in expenditure mainly reflects the restoration of wages of government employees to the levels prior to 2009. The government has however taken some steps in terms of rationalisation of manpower. The overall fiscal deficit is estimated to remain at 11 percent of GDP.”
Approximately ten percent of the Maldivian workforce is employed by the government, an ungainly figure that has been targeted as a key hemorrhage point in the government’s budget. The Finance Ministry recently asked government institutions to curb job creation and new hires.
Earlier this month, President Mohamed Nasheed said the government aimed to bring the fiscal deficit down to a single digit number.
“Government expenditure has been substantially reduced in a number of different areas. For this year, we forecast a budget deficit of 11 percent. We have noted now that it has been reduced by three or four points,” he said.
CARE Maldives summarized its report by criticising the growing inflation rate and trade deficit, but praised government policies that target these issues.
“The progressive policy measures taken by the government especially on the exchange rate combined with declining commodity prices globally would help to reverse these trends.”
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care maldives? care societies economic wing? 😀
CARE Maldives? is the the local answer to IMF?
The prices of global commodity especially food is are rising and not decking - wrong facts
also there is no global slowdown in economic activity- only the west is slowing
please include some balance of opinions too- This CARE does not add any value to what average maldivians already do not know
@ahamed
CARE is a credit ratings agency! Don't be stupid!
From your words, the Maldivians know everything and there's no need to tell them anything at all. Well, got news for you: ignorant fools live in a fools world, where they think they know the answer to everything. Take a peek outside, once in a while.
Did you know that when the "West" slows down, the whole world, in fact, slows down? The "West" includes 99% of the global economy. As mighty as China may be with regard to being the Factory of the World, without the West, China won't have anyone to trade with! China doesn't have an internal market to speak and relies totally on export driven growth. For that it needs Western countries that are hungry for all the cheap goods coming from there.
So, in summary, when the West slows down, the entire gloal economy slows down. Get your facts right next time. Ah, I forgot, you knew this already didn't you, since there is nothing you don't know already.
No prizes that ever went up did ever came down in the Maldives.
Why? Because those with some money with their so called 'businesses' or shops have got NO DECENCY or INTENTION to do so. All they want is to recover their investment OVERNIGHT.
Furthermore, most of these people (traders/businesses) are run with 'looted' state money in the past 20 years.
So basically the bigger traders/businesses are BAD. Plus, they will do everything to hamper the economy so that the general (foolish) people will 'think' it's the new government's fault. When the big-boys sell at higher rates why should the smaller-boys sell any less?
This is what they did for the US dollars too. They are depositing their foreign currencies in banks outside of Maldives. Plus they are also making fortunes by selling the other half which they keep rolling in the streets.
Elanor, I wish you could get this investigated. Most Maldivians think it's the President who's keeping all the dollars/foreign currencies. Or they think that the dollars 'pour' onto the President's desk everyday.
Apart from the poor schooling/education system; most Maldivians lack the ability to rationalize or do any analytical-thinking on any matter.
So there's no Maldivian writer I can see who could do that, Elanor.
CORRECTION:-
"in the past 30 years."
...most of these people (traders/businesses) are run with ‘looted’ state money in the past 30 years.
what good would this do if you cannot convert the currency???????
@mr. addu bin suvadeeb
good to know that CARE is not a health clinic
There is no global economic slow down and certainly the commodity prices are not comming down any time soon. good luck with your clinic
@Ahmed bin Addu bin Suvadheeb
West accounts for 99 % of the world economy..where did u get this crap from?