Govt's new policies may increase recurrent expenditure - MMA

Central bank Maldives Monetary Authority (MMA) has expressed concern that the government’s new policies may increase the state’s recurrent expenditure.

In the chapter on the outlook for 2019 MMA's Annual Report for the year 2018, the report stated that there are several risks to the government’s fiscal balances.

“Risks to fiscal balances are tilted to the downside due to potential slippages on current expenditure stemming from new spending initiatives, which may further exacerbate fiscal imbalances and debt vulnerabilities”, said the report.

However, the overall fiscal deficit is projected to decline to 4.4% of GDP in 2019, from 4.7% in 2018. Total revenue is projected to increase on the back of strong tourism sector growth and its associated revenues.

In their report, MMA has forecast that the prices of goods and services are likely to be reduced in 2019, mainly due to harmonization of water and electricity tariff rates across the country, and the reduction of administered prices of food staples.

President Ibrahim Mohamed Solih has pledged to commence several new policies and services to the Maldives, including a government funded medical insurance scheme for Maldivians abroad in select countries, school breakfast program, and free degree education.