6 thoughts on “Taming fiscal deficit “most pressing macroeconomic priority for Maldives”: IMF mission”

  1. It is not possible to see this government, run by traitors, can do this.
    PPM will never allow it to happen. It will press Waheed to spend more on Security Forces.
    DRP has noting to say.
    JP can howl to its fill, but can be of no use because the drill has no head.
    Rest of the so called parties are simply useless and can be of no value to this crisis.
    MDP is the only hope, that can bring a difference. But as of now, they are helpless!

  2. IMFs story of excessive debt is now like a mantra. There is nothing there that an avarage Maldivian does not know.

    I fail to see why this is news.

  3. The IMF is a voice we have to listen to, but every successful country I have seen develop well has listened carefully to the concerns of world parties and financial counter-parties, but found it's own unique path to success. Most fundamental is understanding the overall economics of the country and where it can grow revenues, not just tax more of current revenues and where good investments will bring good returns through increases in productivity, efficiency, and market access. So far, in the last year or two all the reports I have heard about from outside parties like the IMF have focused on government reform and tax implementation. While it may be true that some other island nations have higher taxes, are they considered successful growing economies? This is not clear one way or the other. What the IMF report as discussed in this article does not discuss is the potential growth of trade and tourism to the Maldives and making a bigger pie. There is substantial room for new domestic and foreign investment into the Maldives in fisheries, aquatic farming, transportation, and tourism. A vision of Maldives as a destination not just for the current nearly 1 million tourists, but for 2 million or even 5 million is a bold vision of growth. Investors don't yet see Maldives as that kind of investment. They are still going to Thailand, Indonesia, Fiji, and other places to invest in tourism development. While cost cutting and government rationalization is very important, so are policies that spur and support growth. Taxation is important, but taxation implemented too quickly can kill growth through unintended consequences. For example, in certain industries it is customary to have tax treaties between countries covering certain sensitive industries (for example businesses that depend on lease of heavy equipment from foreign sources, like ships and airplanes) - but if taxes are implemented before the treaties are, then those industries can suffer tremendous damage that was never intended by the tax authors. Maldives needs taxes and government reform to match it's needs as a fast developing nation. But it also needs a pro-growth strategy and vision. Ten or 15 years ago, Male' had few buildings over 4 or 5 stories. Now the average height of buildings is nearly double this and a whole new island suburb has been built. Where will we be in another 10 years? What policies will take us there?

  4. Agree with Adam.

    IMF and government can't be fixated on using taxation and import duties as means to increase government revenue. Economic growth through increased production of economic activities is needed to generate fresh revenue. There is hardly any incentives or assistance given for private sector growth in this country. Starting from dollar shortage issues to crime, there are only hindrances that the private sector is faced with. There is only so much that the tourism industry can do, diversification is needed and the policy makers need to be committed to bringing about change instead of just talking about it. The economic situation of this country is not just a topic to be debated about in parliament and used as a political tool, and forgotten about the moment the actors are off the screen. We are in real trouble here, and instead of delaying reform even because of elections, the government should have the guts to cut unnecessary expenditures once and for all and steer the country towards a sustainable path of economic development.

  5. However, unlike the other countries, Mathai said, “rich tourists visit the Maldives. For them, an increase in prices will not be a deterrent.”

    Think this one through very carefully. Maybe it wouldn't have an effect if the Maldives were a safe, well managed and happy destination where tourists are made to feel welcome.

    But viewing the situation as rising Muslim extremism, laws against alcohol/pork and increased murder rates, makes a potential increase in taxes the "straw that breaks the camels back". It's sad to watch an entire nation slowly committing suicide.


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