MALE Nov 27 Maldives on Tuesday announced an
optimistic budget-deficit target of 6.1 percent of gross
domestic product for 2013, down from this year's 16 percent,
that it hopes to reach with an ambitious set of cost-cutting and
The country overshot its 2012 deficit goal as a number of
investment projects were put off and the defence budget
ballooned after a controversial power transfer in February.
The International Monetary Fund earlier this month forecast
the 2012 deficit would rise as high as 16 percent of GDP, much
worse than the government's original target of less than 9.8
Finance Minister Abdulla Jihad said the archipelago would
cut its fiscal deficit to 6.1 percent of GDP if all the budget
proposals are implemented.
The controversial power transition on Feb. 7, when former
President Mohamed Nasheed claimed he was forced to step down at
gun point, has taken its toll on this year's budget. State
revenue dwindled as public-private partnerships were called off.
The Indian Ocean island nation, popular for high-end
tourism, has proposed raising its tourism tax by 15 percent from
July next year and reintroducing import duties, as suggested by
the IMF among other measures, to improve sluggish revenue.
Targeting subsidies, freezing state hiring and shutting down
22 loss-making companies were among the cost-cutting proposals.
The IMF earlier this month said strengthening government
finances is the most pressing economic priority. The global
lender expects economic growth to slow to 3.5 percent this year
from the last year's 7.5 percent, weakened by depressed tourism
and weak global conditions.
A modest economic recovery is forecast for 2013 and beyond,
the IMF said. It said inflation was 10.1 percent in September,
which should slow to under 6 percent next year and decline
($1 = 15.3700 Maldives rufiyaas)
(Reporting by J.J. Robinson in Male; Writing by Shihar Aneez;
edited by Larry King)