President Mohamed Nasheed, in his weekly radio address that was broadcast today, has reaffirmed the government's commitment to economic reforms aimed at restructuring the country's economy.
The President said the Maldives' graduation from Least Developed Country status from January 2011, required major reforms to the country's economy to restructure state expenditure and re-organise the revenue streams.
In today's radio address, the President underlined that the current economic policy was aimed at achieving three fundamental economic objectives that were neglected in all previous economic policies.
Three basic objectives of the government economic policies were “reducing public expenditure and increasing state revenue to reduce budget deficit; stopping money printing to prevent devaluation of currency due to increased my supply; and corporatising government services to increase participation of efficient private parties,” the President explained.
He said the economic policies of the previous government have continued to mount government debts as a result of borrowing to finance ever increasing budget deficit and spend on recurrent expenditure.
The President reiterated that the government has “begun implementing necessary economic reforms to increase the Maldives' self-sufficiency following its graduation to a middle income country.”
He said the government's economic policy reforms included floating the Rufiyaa to trade within a fluctuation band of 20 percent of the previous dollar peg.
Further, he outlined other fiscal reforms implemented by the government to increase state revenue and reduce expenditure.
He noted that the government has begun collecting tax on tourism goods and services from January this year, and commence collecting business profit tax from July 18 this year as stipulated in the Business Profit Tax Act.
While underscoring that there were many conditions to be met and legislative fundamentals that were necessary to fully realise the benefits of implementing government's economic policies, the President said the country have already begun to see basic positive outcomes of the reforms.
In this regard, he highlighted that budget deficit that stood at 30 percent of GDP in 2008 has been reduced to around 10 percent of the GDP.
In addition, 12 percent inflation rate in 2007 and 2008 have been reduced to less than 6 percent.
President Nasheed also today outlined further changes the government intended strengthen the economy.
This include, the President reiterated, increasing tourism goods and services tax from current 3.5 percent to 6 percent, introducing a tax on general goods and services and imposition of an income tax.
The President also reaffirmed his announcement earlier that the government would set a minimum wage this year to ensure a decent living from the people's labour.