Minister of Finance Mr. Ibrahim Ameer has noted that seeking foreign aid to supplement a budget support will be challenging amid the ongoing geopolitical conflict between Russia-Ukraine.
The ongoing conflict between the two nations have been putting several dents on the global economy, which in turn as a ripple effect has been felt across various economic sectors of the Maldives as well.
During the press conference on Monday, 5th July, the minister highlighted on the restrictions Maldives has a developing economy in seeking low-interest foreign loans.
“Foreign countries and international financial institutions will be providing grants and loans for development projects, however seeking the same options for budget support is restrained. Especially during a time of global conflict and war,” said the minister.
Meanwhile, most international financial institutions and foreign countries have been incrementing their lending rates amid the dire economical straits.
While the Maldives government is seeking all hospitable approaches on curbing the state expenditure, such constraints are likely to put the public in strenuous circumstances going into the prospective future, according to Minister Ameer.
Despite the known challenges and its subsequent repercussions to the state, the Maldives government is actively taking counter measures to cut down state expenditure and increase revenue streams.
One major decision towards meeting this end was the recently announced plan by the Maldives government on hiking Goods and Services Tax (GST) components; both TGST and GGST will be bumped up under this change.
The minister claimed that GGST will be increased from 6 to 8% while TGST will be incremented from 12 to 16% effective from 2023.