2013年-世界发展银行全球_Maldives_Economic_Update_16页_1mb

Maldives Economic Update Summary

Overview

The Maldives is facing significant political and economic challenges. Crucial elections—Presidential in September 2013 and Majlis in April 2014—are anticipated to be highly contested, with the possibility of a hung parliament. The political uncertainty has been exacerbated by the arrest of former President Mohamed Nasheed, who faces trial for alleged political motivations.

The country's economic performance has been affected by a slowdown in the tourism sector, which is the backbone of the economy. Real GDP growth for 2012 was 3.4%, down from 7% in 2011, primarily due to a 3.7% drop in tourist arrivals from Europe. Despite this, the tourism sector saw a marginal increase in arrivals from China, contributing to a 0.7% growth in the sector. However, the average duration of stay decreased, leading to lower bed nights.

Non-tourism sectors such as construction, fishing, and manufacturing performed better in 2012, with growth rates of 16.1%, 9.7%, and 17.5% respectively. The fishing sector benefited from high international fish prices, while construction was supported by Chinese financial assistance. Manufacturing growth was linked to increased fish product output.

Inflation in Male moderated in 2012, falling from 17.7% in March to 5.4% in December. This was due to falling global food and fuel prices, but recent increases in global fuel prices could rekindle inflationary pressures. The government's increased general goods and services tax (GGST) rate from 3.5% to 6% had a limited impact due to the high dependence on imported goods.

Recent Political and Economic Developments

• Political uncertainty persists ahead of the 2013 and 2014 elections, with former President Nasheed's eligibility still in question.
• The 2012 GDP growth was significantly lower than expected, mainly due to the weakened tourism sector.
• Tourist arrivals fell short of the government's 1 million target, reaching slightly over 958,000.
• The tourism sector's growth was constrained by a reduction in the average duration of stay, from 7 days to 6.7 days.
• Non-tourism sectors, particularly construction, fishing, and manufacturing, performed better, with strong growth driven by external demand and financial support.
• Revenue collection in 2012 was below budget, primarily due to a sharp drop in customs duties and non-tax revenues.

Unsustainable Fiscal Position

• The overall fiscal deficit (after grants) reached 13.4% of GDP in 2012, far exceeding the budgeted 9%.
• The government has resorted to ad-hoc borrowings at high interest rates, increased monetization, and payment arrears to manage its cash flow.
• Payment arrears are estimated to be over 10% of GDP, with the State Trading Organization facing MVR 1.9 billion in arrears.
• The government's universal health insurance scheme, Aasandha, exhausted its full budget by July 2012, while electricity subsidies also exceeded their allocated amount.
• Subsidy schemes are inefficient due to poor targeting, benefiting all sectors including the tourism industry.
• The 2013 budget introduced tax increases and expenditure cuts, but the lack of specific implementation policies limits their effectiveness.

Monetary Policy Conduct

• Monetary policy has become increasingly accommodative due to the unsustainable fiscal position.
• The Maldives Monetary Authority (MMA) has resorted to monetization, absorbing unsubscribed treasury bills and maturing debt obligations.
• Net claims by the MMA on the central government increased by 33% in 2012, the fastest growth since 2008.
• Credit growth to the private sector has remained weak due to cautious bank behavior and regulatory constraints.
• The rufiyaa is overvalued relative to the PPP exchange rate, and continued monetization threatens its stability.
• The exchange rate has been under pressure, with the risk of sharp adjustments that could impact poverty levels.

Economic Outlook

• Political tensions are expected to continue into the election period, potentially leading to prolonged instability.
• The IMF predicts slow GDP growth for 2013 (3.8%) and 2014/2015 (around 4%), driven by weak tourism performance and external shocks.
• The fiscal position is expected to remain weak, with the deficit likely unchanged at around 13.5% of GDP.
• The government needs to implement more substantial and targeted fiscal consolidation measures.
• Addressing the high costs of public-sector remunerations and improving the efficiency of subsidy programs is crucial for long-term economic stability.
• The country's external debt sustainability remains a major concern, with external debt obligations projected to reach over 115% of GDP by 2015.