Maldives budget deficit projected to increase to MVR 12 billion

Finance Minister Ibrahim Ameer. (File Photo/People's Majlis)

Maldivian Finance Minister Ibrahim Ameer, on Wednesday, said the government now projected the budget deficit to increase to MVR 12 billion in the wake of the coronavirus pandemic.

At a National Emergency Operations Center press briefing on Wednesday night, Ameer said the budgetary projections by the government had undergone drastic changes in light of the coronavirus pandemic.

With the severe impact the pandemic has had on the tourism industry, the government now faces a loss of income in billions.

“We have previously also highlighted on the severe decrease in State income. Our initial budgetary projections were that we would, with the combination of grants and non-tax revenue, receive MVR 30 billion. But we no project a MVR 12 billion deficit.

 Tourist arrivals are projected to fall by 37 to 50 percent this year, and the national GDP in projected to fall by 5.7 percent.

“This is a situation which no one has foreseen. This is a sudden and unprecedented negative change in both the local and global economic,” said Ameer.

He said the government was engaged in multiple efforts to mitigate this severe economic impact. The Cabinet had previously decided on cutting down government spending by MVR 1 billion; and Ameer said on Wednesday that the government was no looking to cut down recurrent expenditures by more than MVR 1 billion.

He said the government would seek assistance from both internal and external sources to finance the budget deficit.

The government is ready to secure assistance from the World Bank, while some other financial institutions have also committed to lending assistance, though the paperwork is yet to be readied to finalize agreements, said Ameer.