Friday
22nd Nov 2024
Dhivehi Edition
Finance minister Ibrahim Ameer with economic minister Fayyaz Ismail
The World Bank claimed that the growth in the economy refutes the expenses borne by the Maldivian government.
“Maldives Public Expenditure Review” published by the World Bank stated that even though the government has spent heavily on development projects among other things, the Maldives hasn't achieved much in the prospect of economic growth.
State expenditure increased
The World Bank claimed that the state's pre-pandemic expenses constituted one-third of the national GDP, which although was higher than average for a middle-class country, was in line with the expenditure of a developing country.
The report highlighted that the state’s expenses increased after the Tsunami of 2004 as well as after the ratification of the new constitution in 2008. Furthermore, it also stated that between 2010 and 2014, the state’s expenses remained at 30 percent of the national GDP.
The World Bank reported that between 2015 and 2019, these expenses rose to 34 percent of national GDP and the economic distress caused due to the pandemic caused state expenditure to increase to 50 percent of national GDP.
While the economy resumes to recover post-pandemic, the report states that the current expenditure of the state is at 43 percent of GDP.
Annual growth in the state’s budget unsustainable
The World Bank acknowledged that the state’s annual budget has grown exponentially and called it unsustainable. It reported that the approved annual budgets have grown by 11 percent each year between 2014 and 2021.
The World Bank stated that the budget approved for 2020 saw a 32 percent increase and a large part of it was assigned to capital expenses. However, it is reported that only 82 percent of the assigned capital expenditure is utilized in actuality.
Minimal economic growth despite increase in expenditure
The World Bank claimed that although infrastructure projects grew due to focused attention to developmental projects, records do not show a positive impact on the overall economy despite the heavy spending.
Addressing the reasons for the hindered economic growth, the report stated that most of the equipment and materials required for the government’s PSIP projects needed to be imported and the workforce on these projects mainly consisted of foreign nationals.
Furthermore, the World Bank concluded that should the multiple fiscal and external disparities within the economy persist and remain unaddressed, a crisis is imminent.
Upon being questioned about the government’s failure to minimize unnecessary expenses by the parliament, Minister of Finance, Ahmed Ameer proclaimed that the government expects to grow the economy by driving prospective projects to completion.
Even then, some members of the parliament had questioned the potential of the government’s projects to impact economic growth.