revenue – Minivan News

Government revenue declines in May

Government revenue declined by MVR19.2 million (US$1.2 million) in May compared to the same period last year and reached MVR1.2 billion (US$77.8 million), the central bank has revealed in its monthly economic review.

Total expenditure during the month meanwhile rose by MVR104.9 million (US$6.8 million) and amounted to MVR1.5 billion (US$97 million).

“The decline in total revenue during May 2015 was mainly due to the decline in both tax and non-tax revenue which fell by MVR9.5 million and MVR1.7 million, respectively,” the review stated.

“The fall in tax revenue was mainly contributed by the decline in revenue from business profit tax and tourism tax, while non-tax revenues declined owing to a significant fall in revenue from resort lease rent. Meanwhile, the increase in expenditure was largely due to a growth in recurrent expenditure.”

In May, the government obtained US$20 million from Saudi Arabia for budget support. Finance minister Abdulla Jihad told Minivan News at the time that the funds were to be used to “manage cash flow” as revenue was lower than expected.

A large portion of forecast revenue is expected later in the year, he said, adding that shortfalls are currently plugged through sale of treasury bills (T-bills).

According to the Maldives Monetary Authority (MMA), the total outstanding stock of government securities, including T-bills and treasury bonds (T-bonds), reached MVR18.4 billion (US$1.1 billion) at the end of May, representing an annual increase of 36 percent.

The forecast for government income in this year’s record MVR24.3 billion (US$1.5 billion) budget is MVR21.5 billion (US$1.3 billion).

The projected revenue includes MVR3.4 billion (US$220 million) anticipated from new revenue raising measures, including revisions of import duty rates, the introduction of a “green tax”, acquisition fees from investments in special economic zones (SEZs), and leasing 10 islands for resort development.

The MMA’s monthly economic review meanwhile revealed that gross international reserves increased by 65 percent in May compared to the corresponding period in 2014 and stood at US$703.7 million, “of which usable reserves amounted to US$229.7 million.”

“During the review month usable reserves also registered increases in both monthly and annual terms by 12 percent and 41 percent, respectively. As for gross reserves in terms of months of imports, it rose both in monthly and annual terms and stood at 4.2 months at the end of May 2015.

Tourism and fisheries

The economic review noted that tourist arrivals declined by three percent in April compared to the same period in 2014, reaching a total of 102,242 guests.

“The annual decline in arrivals was contributed by the significant decline in tourist arrivals from Europe,” the MMA observed.

“In April 2015, total bednights registered a decline of 7 percent in annual terms, as the average duration of stay declined from 6.2 to 5.9 days. Partly reflecting the decrease in bednights, the occupancy rate of the industry declined to 73 percent in April 2015 from 80 percent in April 2014.”

In its quarterly economic bulletin, the central bank noted that despite a three percent growth in tourist arrivals in the first quarter of 2014, tourist bednights declined by three percent “owing to the fall in average stay of tourists from 6.3 days in Q1-2014 to 6.0 in the review quarter.”

Tourism receipts also decreased by four percent in the first quarter compared to the corresponding period in 2014.

“On the supply side, the operational capacity of the tourism industry increased by 3% when compared with Q1-2014 to reach an average of 27,827 beds. Reflecting this and the decline in tourist bednights, the occupancy rate of the industry fell to 79 percent in Q1- 2015 from 84 percent in Q1-2014,” the bulletin stated.

The volume of fish purchases meanwhile decreased to 6,134.6 metric tonnes in April, registering an annual decline of 11 percent.

“In May 2015, both the volume and earnings on fish exports declined in annual terms by 35 percent and 12 percent, respectively. This was mainly owing to the decrease in the volume and earnings of frozen skipjack and yellowfin tuna exports,” the economic review revealed.

In other sectors, the MMA noted that construction activity “continued to expand and remained robust as indicated by the annual increase in construction-related imports and increased bank credit to the sector during Q1-2015.”

“Activity in the wholesale and retail trade also grew, as indicated by increased imports by the private sector (excluding tourism) and bank credit to the sector.”

The rate of inflation in Malé meanwhile accelerated to 1.7 percent in April from 1.1 percent in March.

“The pick-up in inflation during the month was mostly contributed by the growth in fish prices and prices charged for housing rent,” the central ban explained.

“The monthly percentage change in the [Consumer Price Index] increased in April 2015. This was mainly due to the rise in fish and cigarett e prices. Cigarette prices rose during the month due to the increase in the import duty levied in April 2015.”

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Maldivian economy grew by 8.5 percent in 2014, says MMA

The Maldivian economy grew at 8.5 percent in 2014, the central bank has said. Growth was driven by a solid increase in tourist arrivals and the strong recovery of the construction sector.

The government’s fiscal performance in 2014, however, was weaker than anticipated due to shortfalls in revenue and overspending on recurrent expenses, the Maldives Monetary Authority said in its Annual Economic Review.

The International Monetary Fund (IMF) in March provided a much lower figure of five percent for economic growth, and highlighted the need for improved data collection on macroeconomic statistics.

According to the MMA, the government’s total debt reached 65 percent of GDP in 2014, while the fiscal deficit stood at MVR1.6billion or 3.4 percent of GDP, higher than the estimated MVR1.3billion or 2.8 percent.

The tax authority has meanwhile collected MVR951.3million (US$61.9million) in tax revenue in March. The figure is 2.7 percent higher than forecasted as several tourism companies had paid late land rents and fines after the Maldives Inland Revenue Authority (MIRA) froze the accounts of some 20 businesses in April.

MIRA has received MVR 5.61 billion (US$ 360 million) in revenue this year, an increase of 27.3 percent compared to 2014. The tax authority, however, did not state if revenue collection meets targets.

Robust growth

Some 1.2million tourists brought in an estimated US$2.6 billion to the Maldives in 2014. Arrivals grew by 7 percent and was largely driven by arrivals from China. European arrivals recorded a marginal growth due to a decline in Russian tourists.

The growth in bed nights stood at 4 percent – slight lower in magnitude than the growth in arrivals – reflecting the decline in average stay from 6.3 days in 2013 to 6.1 days in 2014. The downward trend in average stay, which has become more marked since 2009, is due to a shift in the composition of inbound tourist markets towards countries such as China, the MMA said

Meanwhile, total tourist revenue remained buoyant and grew by 13% (20% growth in 2013) to reach an estimated US$2.6 billion during 2014. The significant difference between the growth in revenue and bednights may reflect the increase in tourist expenditure on high-end services in the industry, the MMA said.

Airline movements by international carriers, such as Mega Maldives, Cathay Pacific and budget airlines such as Tiger Airways, also increased during the year, and facilitated the growth in tourist arrivals.

Three new resorts were opened, increasing total registered number of resorts in the Maldives to 112. Registered guesthouses reached a total of 216. Some 80 new guesthouses were registered at tourism ministry, but only a total of 95 in operation.

The construction sector bounced back from two consecutive years of negative growth. The revival was mainly due to the ease in obtaining construction materials after India waived restrictions on the export of stone aggregate to in March 2014. This allowed the resumption of large-scale public sector infrastructure projects and major housing projects, the MMA said.

The fisheries sector declined by 6 percent, following a strong growth of 8 percent in 2013, due to a decline in fish catch, and also because of the significant dip in international tuna prices.

The fishing industry in the Maldives represents about one percent of GDP in 2014. It accounted for 10% of total employment in 2010. Export revenue from fish and fish products accounts for 47 percent of merchandise exports.

Poor fiscal performance

The government collected some MVR14.5billion in revenue in 2014. But total revenue fell short of the target as some of the new revenue measures planned in the budget did not materialize.

The implementation of of a T-GST hike – from 8 percent to 12 percent – was delayed from July 2014 to November 2014; tourism tax, initially anticipated to be collected throughout the year was only collected from February to November.

There was a “considerable shortfall” from the lease period extension fee collected during the year. The lump-sum resort acquisition fee from the 12 new islands planned to be leased out for resort development did not materialize either.

As a result, total revenue was MVR351.0 million less than budgeted and amounted.

The total expenditure of MVR16.5 billion was slightly lower than budgeted, but only because the government stopped spending on development projects and redirected funds to financing recurrent expenditure.

In the banking sector, the main area of concern continued to be credit risk, as indicated by the high level of poor-quality loans. Non-performing loans “remain a concern with a ratio of 16 percent,” the MMA said.

Gross international reserves increased to US$614.7 million at the end of the year. Out of this, usable reserves accounted for US$143.9 million. The “marked expansion” owed to the improvement in foreign currency receipts of the government, the MMA said.

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Tax authority collects MVR1.2bn in March

The country’s tax authority collected MVR1.27 billion (US$82 million) in March, up 29 percent from the same period last year.

The Maldives Inland Revenue Authority noted that revenue was 18.8 percent above forecasts thanks to higher tourism goods and services tax (T-GST) receipts following a hike from eight to 12 percent in November.

Revenue also rose from tourist lease rent and the general GST.

A portion of GST payments from February was also collected in March as February 28 fell on a weekend and the deadline was moved to March 1.

Fines collected last month were also nine times higher than March 2014, while payments for resort lease period extension fees also contributed to the revenue growth.

The extension fees were not collected in the corresponding period last year.

GST payments accounted for 58 percent of total revenue collected in March 2015, followed by tourism land rent (22.3 percent), airport service charge (4.2 percent), business profit tax (3.9 percent), and lease period extension fees (3.6 percent).

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Revenue collection in February 17 percent below forecast, reveals MIRA

The Maldives Inland Revenue Authority (MIRA) collected MVR905.7 million in February, 84.7 percent more than previous month but 17.6 percent below income forecasts.

MIRA explained in a press statement last week that income from Tourism Goods and Service Tax (T-GST) increased by 32.7 % following a T-GST hike from eight to 12 percent in November whist GST revenue also increased by 18.9 percent.

Revenue from Business Profit Tax (BPT) meanwhile rose 232 percent from January as the deadline for the second interim payment was moved to February 1 as January 31 fell on a weekend.

“The collection for February 2015 is 17.6 percent less than the forecasted amount for this month,” MIRA noted.

“The reasons for this includes the decrease in tourism related revenues by 17 percent as tourist arrivals did not meet expectations, and the collection of GST in March as the deadline was moved to 1 March because 28 February fell on a weekend.”

A total of MVR190.17 million was also collected as lease period extension fees from resorts whilst tourism lease rent amounted to MVR34.42 million.

The total revenue collected in the first two months of January amounted to MVR2.45 billion, 36.2 percent higher than the same period last year.

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Finance minister presents record MVR24.3 billion state budget to parliament

Finance Minister Abdulla Jihad submitted an estimated 2015 state budget of MVR24.3 billion (US$1.5 billion) for parliamentary approval today – 35 percent higher than this year’s record MVR17.96 billion (US$1.16 billion) budget.

“The estimated budget deficit for 2015 is MVR1.3 billion [US$84 million],” Jihad said in his budget speech at today’s sitting of parliament.

“This is 2.5 percent of GDP. The deficit is to be financed by MVR1.1 billion [US$71 million] estimated from foreign parties and MVR223 million [US$14 million] estimated from domestic finance.”

After expressing fears in August that the deficit for this year would spiral to MVR4 billion – or 10 percent of GDP, Jihad told MPs today that the 2014 deficit was expected to be just MVR1.6 billion (US$103 million) as a result of compromises by parliament to the government’s revenue raising measures.

Recurrent expenditure in 2015 is expected to be MVR15.8 billion (US$1 billion) or 65 percent of the budget, he explained.

Salaries and allowances for state employees accounts for 26 percent of the total budget, Jihad noted, followed by social security and welfare (13 percent) and administrative costs (8 percent).

Capital expenditure meanwhile accounts for 30 percent of the budget, Jihad continued, which includes MVR6.3 billion (US$408 million) for the Public Sector Investment Programme (PSIP) and loan repayment.

The forecast for government income or revenue is MVR21.5 billion (US$1.3 billion), Jihad said, including MVR13 billion (US$843 million) in tax revenue, MVR6.8 billion (US$440 million) in non-tax revenue, and MVR1.7 billion (US$110 million) in free aid.

Jihad noted that MVR3.4 billion (US$220 million) is anticipated from new revenue raising measures, which includes revisions of import duty rates from July onward, the introduction of a ‘green tax’, fees from investments to special economic zones, income from the home ownership programme, and leasing 10 islands for resort development.

Fund allocations

The MVR2.9 billion (US$188 million) allocated for the education sector is 32 percent higher than 2014, Jihad continued, which includes higher expenditure on scholarships, student loans, training programmes, financial assistance for pre-schools, and the cost of implementing the new national education curriculum.

The MVR2.1 billion (US$136 million) allocated for the health sector is 21 percent higher than 2014, Jihad noted, while MVR3.2 billion (US$207 million) was allocated for social security and subsidies provided by the National Social Protection Agency, including MVR1 billion (US$65 million) earmarked for the MVR5,000 (US$324) a month pension for the elderly and MVR750 million (US$48 million) for the unlimited Aasandha health insurance programme.

Some 52 programmes would be conducted to upgrade three hospitals to tertiary level and develop infrastructure in regional hospitals and island health centres, he noted.

While MVR90 million (US$5.8 million) was allocated for fisheries and agriculture, Jihad said MVR50 million (US$3.2 million) was allocated for providing financial assistance for small and medium-sized enterprises.

“As development of Maldivian youth is one of the most important pledges of this government, MVR300 million [US$19.4 million] has been budgeted to conduct different programmes aimed at youth,” Jihad said, which was 55 percent higher than 2014.

Funds have also been earmarked for the celebration of the 50th anniversary of independence, Jihad noted.

Notable PSIP projects include the development of the Ibrahim Nasir International Airport (INIA), the Malé-Hulhulé bridge project, the Indira Gandhi Memorial Hospital (IGMH) renovation project, water and sewerage projects for 66 islands, coastal protection for 22 islands, 23 new harbour construction projects and 38 ongoing harbour projects, and waste management projects in 105 islands.

Funds have also been allocated in the budget for a renewable energy project expected to commence next year, he added.

A total of MVR695 million (US$45 million) was earmarked for housing programmes, Jihad continued, which includes the construction 1,985 housing units in Hulhumalé.

In addition to a project to resolve flooding in the capital, Jihad said 15 road construction projects in other islands were included in the budget.

2014

While the projected deficit for 2014 was MVR1.3 billion, Jihad said the deficit at the end of the year would be MVR1.6 billion (US$103 million) as a result of compromises by parliament to the government’s revenue raising measures.

A proposed Tourism Goods and Services Tax hike was delayed from July to November while the reintroduction of the US$8 bed tax was delayed by a month.

While the finance ministry anticipated payments for resort lease extension fees in full, parliament revised the budget for the fees to be paid in instalments over 18 months.

Jihad meanwhile noted that the International Monetary Fund’s (IMF) global economic outlook released in October predicted economic growth in 2014 and 2015 after the recovering from the global financial crisis and recession of 2007 to 2012.

Accordingly, domestic economic growth in 2014 was expected to be 8.5 percent, Jihad said, while the forecast for 2015 is 10.5 percent – driven by tourism, telecommunications, and transport.

The tourism industry is expected to grow by 8 percent with 1.5 million tourist arrivals, he added, while the inflation rate has meanwhile remained steady at 1.4 percent as of September.

On the balance of payments, Jihad revealed that the current account deficit would reach US$290 million or 10 percent of GDP, although it is projected to decrease to US$215 in 2015.

The official reserve at the end of 2014 is expected to be US$445 million – projected to rise to US$460 million next year.

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Government expenditure rose 58 percent in June, reveals MMA

Government spending in June rose 58 percent compared to the same period in 2013, the Maldives Monetary Authority’s (MMA) monthly economic review for July 2014 has revealed.

Total expenditure, excluding net lending, “amounted to MVR1.6 billion (US$103 million) in June 2014,” stated the report released on Sunday (August 31).

Total government revenue, excluding grants, meanwhile rose four percent in annual terms and reached MVR0.9 billion (US$58 million).

“The increase in total revenue during June 2014 was largely due to the 57 percent growth in import duty and the 9 percent increase in total goods and services tax,” the central bank explained.

“Meanwhile, non-tax revenue registered a decline owing to the 18 percent decline in resort lease rent. As for the increase in expenditure, it was mainly due to the 30 percent increase in current expenditure.”

Budget deficit

In early August, Finance Minister Abdulla Jihad revealed that the government was facing “great difficulty in managing the budget deficit” due to shortfalls in revenue.

The ballooning budget deficit – which Jihad warned could reach MVR4 billion (US$260 million) or 10.6 percent of GDP – could affect the government’s ability to pay civil servants, he said.

A fiscal deficit of MVR1.3 million (US$84,306) had been projected in the record MVR17.96 billion (US$1.1 billion) budget approved by parliament.

The budget was inclusive of proposed revenue raising measures – many of which had failed to materialise during the previous administration – amounting to MVR3.4 billion (US$220 million), or 19 percent of the budget.

“Expenses keep on increasing, even as we don’t receive any revenue. We did not get the expected revenue this year either,” Jihad said last month.

Despite parliament passing the measures in February – including tax and import duty hikes – Jihad predicted at the time that the anticipated revenue might not be realised in full due to compromises.

“We try to make regular salary payments even if we have to take loans in order to do so,” Jihad said.

The monthly review revealed that the total outstanding stock of government securities – treasury bills and bonds – increased 18 percent in July compared to the corresponding period last year, reaching MVR13.7 billion (US$888 million).

“The annual growth in government securities was contributed by the increase in the amount of T-bills issued by the government to manage its growing cash flow requirements,” the review explained.

The MMA had previously warned that shortfalls in revenue and overruns in expenditure could jeopardise the country’s debt sustainability.

In May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the untargeted subsidies” – and increasing revenue.

Tourism, fisheries and inflation

Tourist arrivals in July increased 20 percent from the previous month and 14 percent compared to July 2013, reaching 100,191 visitors, the review noted.

While bednights rose by nine percent in annual terms, the report noted that average duration of stay declined from 6.0 days in July last year to 5.7 days this year.

“With the increase in bednights, the occupancy rate also rose to 69 percent in July 2014 from 66 percent in the same period last year,” the review stated.

Fish purchases meanwhile declined by 44 percent to 2,124.7 metric tonnes compared to July 2013, the report revealed.

While the volume of fish exports fell by 54 percent, earnings on fish exports declined by 41 percent, which was “contributed mainly by the fall in export of frozen yellow fin tuna.”

The rate of inflation in the capital decreased to 2.4 percent from 3.5 percent in July 2013 and 3.6 percent the previous year, the review found, which was due to “the slower growth of food prices, especially fish, and the moderation in the growth in prices charged for rent and health services.”

The review noted that the trade deficit widened by 38 percent in July compared to the same period last year “due to the 27 percent increase in imports and the 34 percent decline in exports.”

Gross international reserves rose four percent from the previous month and 42 percent in annual terms, the review stated, amounting to US$497.6 million at the end of July.

“This mainly reflects the temporary increase in foreign currency transfers by the commercial banks in the review period,” the central bank explained.

“As for reserves in terms of months of imports, it also increased in both monthly and annual terms and stood at 3.2 months during the review month.”

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World Bank provides US$6.5 million grant for public financial management system

The World Bank has approved a US$6.5 million International Development Association (IDA) grant to support the strengthening of the Public Financial Management (PFM) System of the Maldives, which would help “government institutions to make informed decisions on fiscal adjustments in an efficient manner”.

In a press release on Tuesday (July 15), the World Bank noted that “a high level of fiscal discipline” was needed for translating the current administration’s key policies and objectives into “a medium-term development strategy”.

“A key challenge for the country will be to ensure that the government’s social and economic goals are fully consistent with the urgent need for fiscal consolidation to restore fiscal and debt sustainability,” said Country Director for Sri Lanka and Maldives Francoise Clottes.

“We are happy to assist the government in this endeavour with both financial and technical support.”

According to the World Bank, “the project will help enhance budget credibility, transparency, and financial reporting of central government finances.”

“The entry points for intervention will be the Economic Policy Planning Section, National Budget Formulation and Analysis Section, Debt Management Division, Tender Evaluation Section, Secretariat of the Privatisation and Corporatisation Board, and Treasury and Public Accounts Division; internal audit sections; and line ministries.”

“The project design also includes support to strengthen the institutional framework of key Ministry of Finance and Treasury functions and to enhance knowledge transfer through on-the-job training by technical experts,” said Jiwanka Wickramasinghe, Task Team Leader of the Project.

The press statement noted that the proposed PFM Systems Strengthening Project would contribute to the government’s long-term and “overarching goal by addressing the most urgent PFM weaknesses.”

Macroeconomic challenges

In its annual global economic prospects report released last month, the World Bank had predicted a positive outlook for the Maldivian economy in 2014 with a projected GDP growth of 4.5 percent, “driven by strong tourist arrivals, particularly by robust growth in the Chinese tourist segment.”

The Maldives Monetary Authority (MMA) had also revealed earlier in June that economic activity expanded in the first quarter of 2014 “driven by the strong growth of the tourism sector during the ongoing high season of the industry.”

The central bank noted that the 10 percent annual increase in arrivals during the first quarter was “entirely driven by the significant increase (24 percent) in arrivals from the Chinese market.”

Meanwhile, in late May, a delegation from the World Bank led by the World Bank Vice President Philippe Le Houérou – in his first visit to the Maldives since assuming the post in July 2013 – met President Abdulla Yameen and agreed to work with the government in developing a national strategy for fostering growth and consolidating public finances.

The discussion focused on “the need to reduce fiscal deficits, create a favourable investment climate for the private sector and delivery of key public services,” according to a press release from the World Bank.

Le Houérou noted that the challenges faced by the Maldives includes “balancing public accounts while delivering public services on some 200 islands across hundreds of kilometres of the Indian Ocean.

The issue is how Maldives can make the most of its potential in order to achieve inclusive and sustainable development.”

In May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the untargeted subsidies” – and increasing revenue.

In a report on macroeconomic developments in 2013, the MMA had warned that shortfalls in revenue or overruns in expenditure in 2014 “will undermine medium-term debt sustainability” and adversely affect the exchange rate and prices.

Despite a positive outlook for growth, “there is a considerable amount of uncertainty surrounding the 2014 budget. Overruns in current expenditure will most likely lead to ﬁnancing diﬃculties for the government or further crowding out of the private sector,” the central bank warned.

“Any setback to ﬁscal consolidation either due to slippages in revenue or current expenditure will undermine medium-term debt sustainability and will have adverse implications for exchange rate and prices.”

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Slippages in revenue or expenditure will undermine debt sustainability: MMA macroeconomic report

Shortfalls in revenue or overruns in expenditure in 2014 “will undermine medium-term debt sustainability” and adversely affect the exchange rate and prices, the Maldives Monetary Authority (MMA) has cautioned in a report on macroeconomic developments in 2013.

On the outlook for the economy in 2014, the report released this week noted that the fiscal deficit was projected to decline to 3.2 percent this year from 4.7 percent in 2013 on the back of higher revenue from tourism-related taxes and payments for resort lease extensions as well as rationalisation of subsidies.

“Despite this positive outlook, there is a considerable amount of uncertainty surrounding the 2014 budget. Overruns in current expenditure will most likely lead to ﬁnancing diﬃculties for the government or further crowding out of the private sector,” the central bank warned.

Outlook for 2014

Economic growth in 2014 is projected at 4.5 percent, an increase of 0.8 percent from the previous year.

“Growth will be driven by the continued expansion of tourism activity which is to be mainly supported by the robust growth of Chinese tourists,” the report explained.

“In 2014, growth is also expected to beneﬁt from the recovery of construction sector which registered declines in the past two years. Activity in the construction sector is expected to recover due to the easing of material shortages and the continued expansion of residential construction projects amid improved bank credit to the sector.”

While the transport and communication sectors are expected to grow “in tandem with better prospects for the tourism industry,” the report noted that primary fishing activity is projected to decline slightly.

Inflation is expected to “remain moderate” in 2014, which “largely reflects the weaker outlook for global commodity prices”.

However, lower commodity prices were expected to “offset the upward impact of one-oﬀ factors such as the introduction of GST on communication services and reversal of import duty for certain goods during the year.”

The current account deficit is expected to widen by 16 percent to US$269.9 million this year as “improved receipts from tourism is insuﬃcient to oﬀ set the increase in imports, interest payments and remittance outﬂows.”

While imports are expected to grow “in line with the projected increase in economic activity from tourism, construction and government sectors,” exports are expected to decline on account of a projected decrease in fish catch and global tuna prices.

“Meanwhile, gross international reserves are projected to improve in 2014 mainly due to inﬂows from the planned new revenue measures stemming from the tourism sector. In line with this improvement, reserves in terms of months of imports, are also projected to increase slightly,” the report stated.

Revenue and expenditure

While total revenue excluding grants reached MVR11.5 billion (US$745 million) last year – an increase of 18 percent from the previous year – revenue collection was lower than anticipated “owing to delays in the implementation of the planned new revenue raising measures as envisaged under the budget.”

Tax revenue accounted for 75 percent of total revenue in 2013 while non-tax revenue “declined marginally” to MVR2.8 billion (US$181 million).

Total government expenditure in 2013 was MVR13.5 billion (US$875 million), which was four percent below the target.

The report explained that capital expenditure was significantly lower than expect, “which offset sizeable overruns in current expenditure.”

“Meanwhile, although the government repaid some of the unpaid bills from previous years, a further build-up of arrears took place in 2013 as well and if these are considered total expenditure for 2013 will be much higher than estimated,” the report stated.

Current expenditure accounted for 84 percent of total government spending in 2013, reaching MVR11.4 billion (US$739 million), which was 11 percent in excess of the budgeted amount.

Salaries and allowances contributed the largest share at 48 percent of current expenditure, “reflecting the bulky public sector,” followed by subsidies and social welfare contributions at 18 percent, administrative costs at 13 percent, and interest payments at eight percent.

As large debt repayments were made between December 2012 and February 2013, interest payments in 2013 declined by 19 percent compared to the previous year and stood at MVR893.6 million (US$57.9 million).

Debt and deficit

As a result of “slippages in both revenue and expenditure” in 2013, the fiscal deficit is currently estimated at 4.7 percent of GDP, down from 9.2 percent in 2012.

The budgeted target for 2013 was however 3.6 percent.

The report noted that total debt of the government reached 78 percent of GDP at the end of 2013 as a consequence of “the sustained high budget deficit” over the past years.

Domestic debt accounted for 58 percent of total public and publicly-guaranteed debt.

“In 2013, the ﬁnancing requirement of the government was met almost entirely through domestic sources: mainly through the issuance of Treasury bills (T-bills) to the domestic market and monetisation,” the report explained.

Net credit to the government by the MMA “increased from MVR4.7 billion at the end of 2012 to MVR6.0 billion at the end of 2013,” the report revealed.

The total outstanding stock of T-bills meanwhile reached MVR8.2 billion by the end of 2013.

“A large part of this increase was attributable to the increase in investments by other ﬁnancial corporations and public non-ﬁnancial corporations, which can be seen from the increase in their share of holdings (as a percent of total outstanding T-bills) from 28% at the end of 2012 to 44% at the end of 2013,” the report stated.

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Revenue collected by customs increased 17 percent in first quarter

Total revenue of the Maldives Customs Service (MCS) in the first quarter of 2014 increased 17 percent compared to the same period the previous year.

The MCS revealed yesterday that a total of MVR424.9 million worth of custom duties and other charges – fees and fines – was collected in the first quarter this year while MVR363.3 million was collected in the first quarter of 2013.

“The total CIF [cost, insurance and freight] value of goods imported has also increased by 11 percent during 2014Q1, when compared to 2013Q1,” MCS said.

“Total imports measured MVR7.2 billion during 2014Q1, while it was MVR6.5 billion during the same period last year.”

One-third of the MVR7.2 billion worth goods imported during the first quarter represented importation of petroleum products.

“The second most imported category of goods was food items, which accounted 20 percent of total imports, followed by machinery and electronics which shared 14 percent of total imports,” MCS noted.

“Exports, on the other hand, have declined by 25 percent during 2014Q1, compared to 2013Q1. Total FOB value of goods sold abroad valued MVR 752.5 million in 2013Q1. However, this figure decreased to MVR 562.2 million in 2014Q1. Approximately 70 percent of goods imported during 2014Q1 were sourced from 5 countries and 64 percent of goods exported from Maldives were bought by 5 countries.”

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