MDP warns of worsening economic crisis due to delayed reforms
Maldivian Democratic Party (MDP) has raised concerns over the government's delay in implementing crucial economic reforms, warning that the country’s financial situation is deteriorating as a result.
Former Finance Minister Ibrahim Ameer, speaking at an MDP press conference today, emphasized that despite last month’s budget proposals, no substantial steps have been taken to address the economic challenges.
Ameer, who served as finance minister under the previous MDP government, said the government has yet to secure funding for the budget and that the economic reforms outlined in the budget have been put on hold.
He criticized the current administration for what he described as a lack of action on fiscal reform measures, which he claimed had been initiated during the MDP's tenure.
We had started implementing fiscal reforms, aiming for a 6% increase in GDP through revenue enhancement and expenditure reduction.
He said
Ameer explained that this included targeting an MVR 3 billion revenue increase through tax rate changes and a reduction in expenditure by MVR 3 billion through bulk procurement agreements.
He highlighted additional reform plans that were set in motion during the MDP government, such as a new subsidy system, reforms to Aasandha, and measures to mitigate risks associated with fluctuations in oil prices.
He urged the current government to continue the cost-cutting initiatives that were already planned.
Ameer also expressed disappointment over the government's lack of progress, stating that all efforts over the past nine months have been focused on reviewing previous MDP policies rather than implementing new reforms.
The government has spent nine months conducting studies, but no tangible progress has been made
Ameer said
He warned that further delays in implementing these reforms would lead to a significant increase in the budget deficit, which could balloon from the current estimate of MVR 50 billion to MVR 57 billion.
Ameer added that without urgent reform measures, the government may need to raise an additional MVR 1.8 billion, particularly if subsidy reforms are not implemented soon.
He further noted that the baseline budget deficit currently stands at MVR 14 billion and that delays in reforming subsidies could add another MVR 916 million to the deficit in the fourth quarter of this year alone.
The former finance minister expressed frustration over the government's failure to secure foreign financing to support the budget, warning that the consequences of inaction are already becoming evident.
It is already obvious that the government has not raised a single dollar from abroad to finance the budget. We do not know how to raise another MVR 1 billion. The bitter consequences are already being seen.
He concluded
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