World Bank: Maldives' poverty level will decrease to pre-pandemic levels

Drivers on a road in the capital Male' city: MVR 79 million was included in the state budget for 2020 for the road development of Male city. (Sun Photo/Fayaz Moosa)

World Bank has forecasted that the Maldivian economy will maintain strong growth in the coming years as the poverty rate in the island nation is expected to drop lower than it was before the COVID-19 pandemic. 

As per the World Bank’s Maldives Development Update (MDU) launched on Sunday during a special ceremony held at Maldives National University (MNU) - while the economy has not progressed to levels estimated for this year, Maldives has the fastest-growing economy of the South Asian countries. The reasons for this include rapid growth include the increase in tourist arrivals, capital spending, and private consumption.

Deputy Finance Minister Mariyam Manarath, who spoke at the ceremony, highlighted that the government's objectives for fiscal reform are strong. She detailed one of them as the creation of a thorough, targeted subsidy reform. The Deputy Minister reassured that the government would prioritize the weakest groups within the society in attaining fiscal sustainability. 

She also named new investments such as the Ihavandhippolhu port in the north, and integrated tourism in the south Hankede as projects that will boost economic growth.

Deputy Minister Minrath highlighted that Maldives, as mentioned in the World Bank’s Global Economic Prospects report is one of the countries with the fastest-growing economy, due to tourism and Infrastructural investments. She further said the government will keep exploring avenues to double the size of the economy through such investments.

Ahmed Saruvash Adam, chief financial budget executive, briefed on the medium-term revenue strategy and the ongoing efforts to reduce Aasandha inefficiencies and increase the tax base.

He noted while the initial revenue side consolidation target was three percent, given the tourism sector's better-than-expected performance, they expect the percentage to be higher and the difference to be smaller even with the delay in subsidizing (expenditure side) changes.

While 2019 was the peak year of economic growth in the Maldives, this year even with the risk confronted by the world’s economy, Maldives’ economy continues to grow exponentially. With the global recession and inflation, the prices of goods have gone up and have direct effects on the lives of the people, it is a step forward for the Maldives as the world bank estimates that the poverty level in Maldives will be lower than before the pandemic.