According to Minister of Finance Mr. Ibrahim Ameer, the planned hike in Goods and Services Tax (GST) will push the country’s inflation rate upwards in 2023.
Though the inflation rate in terms of Maldives Consumer Price Index (CPI) are expected to increase, it will bump by just 1% according to the minister.
Minister Ameer, during the press conference held on Tuesday afternoon at the President’s Office confirmed of strong impetus by the state to revitalize the fiscal strength of the country.
The ministry was engaged in discussions with both International Monetary Fund (IMF) and World Bank to seek solutions for a fiscal strength improvement.
Earlier, it was announced that the government of Maldives was planning to bump General Goods and Services Tax (GGST) from 6 to 8% while Tourism Goods and Services Tax (TGST) will rise from 12 to 16%.
While speaking about this decision, the minister further highlighted on strong repercussions the country may face if the state did not control government expenditure while simultaneously improving revenue streams.
Should the expenditure continue to drive up in momentum, the state may be required to take undesirable steps such as a probable slice in the salaries of civil servants; that would pose several economical plights for the working class.
“We are challenged with cutting down expenditure while simultaneously seeking options to improve the revenue. IMF in its recommendations had assessed that the GGST and TGST levied on businesses and services are comparatively lower in Maldives compared to other countries with similar economies,” the minister commented.