Maldives Monetary Authority (MMA) has said the measures taken to cut government expenses next year will see positive results. MMA made the remarks at the Parliamentary Budget Committee. MMA also recommended that priority be given to projects that will bring greater economic benefits next year.
Speaking at the committee, Senior Research Analyst Mohamed Imthinaan Saudullah said the central bank advises the government to give priority to spending cuts over revenue increase policies. He said the budget includes several measures to reduce government expenditure next year and recommends the budget be planned in such a way these measures can be implemented as soon and as efficiently as possible. Noting major development projects are heavily dependent on imports, he said the central bank has recommended these projects be implemented once the supply of foreign exchange for economic activities is sufficient.
The main revenue increase plan for the next year is to increase the Goods and Service Tax (GST) from 6% to 8% and the Tourism Goods and Service Tax (TGST) rate from 12% to 16%. These two taxes are currently implemented under GST. The government has forecast to receive USD2 billion in revenue in State Budget 2023, of which 70% will come from taxes. The state is expected to receive a total of USD1.5 billion in taxes next year.