The state budget passed for 2020 will see a MVR 12 billion deficit due to the situation facing the Maldives due to the Novel Coronavirus (Covid-19) pandemic.
This was revealed by Minister of Finance, Ibrahim Ameer during a press conference on Wednesday night, where he joined the Covid-19 taskforce at the National Emergency Operations Center (NEOC) to provide the latest updates facing the country’s economy, due to the pandemic.
Stressing that this situation was not predicted and that the entire globe is facing the same economic downturn following the pandemic, the minister stated that the country is expecting to face severe changes to the state budget passed for this year.
As such, national productivity is expected to plummet by 5.7% compared to the previous year, and may even decrease more than that.
At a time President Ibrahim Mohamed Solih has also stressed on severe impacts of the pandemic on the economic growth of the country, Minister Ameer revealed that tourist arrivals are expected to drop between 37% – 50%.
Further noting that state revenues are dropping significantly, the minister highlighted that it is important to reduce expenditure during these trying times.
As such, MVR one billion will be reduced from the state budget and recurrent expenditure will also be reduced by a significant amount. He added that state revenue is based on tax revenue and non-tax revenue as well as the free aid extended by foreign countries. Authorities also expect to receive MVR 30 billion as state revenue for the state budget 2020.
In addition, the minister noted that Public Sector Investment Programs (PSIP) will not be halted. However, project managers are required to seek an explicit permit from the Finance Ministry prior. This is the direct result of the changes brought to the state revenue, said Ameer.
This is an opportunity for Maldives to diversify the country’s economy, he added.
As such, Ameer noted that the manifesto by the main ruling Maldivian Democratic Party (MDP) highlights several methods through which the country’s economy may be diversified, including expanding agricultural and fisheries businesses.
Work is currently underway at the ministry to expand agricultural businesses.