President Mohamed Nasheed has asserted that the government was confident of the advantages of its proposed tax reforms and new revenue measures for local business.
Highlighting the monetary and fiscal reforms proposed by the government in this week´s radio address, the President said the current situation was caused by considerably higher state expenditure that continued exceed revenue.
He said ¨it is now clear that state expenditure can be reduced to a certain level¨ implying that the government expenditure is currently at minimum and cannot be reduced any further and the only available option is increasing revenue.
¨A large proportion of the deficit is currently financed by issuing treasury bills to commercial banks,¨ he said. However, he noted that issuing treasury bills to commercial banks ¨significantly reduce the banks´ capability to lend to the private sector.¨
The President said local businesses would not flourish if banks were not able to lend them and ¨without a flourishing private sector, there will be no job opportunities.¨
He reiterated that, successful implementation of proposed reforms was expected to increase state revenue to MRF14 billion, in 2012, which would in turn reduce state´s reliance on commercial banks to finance the deficit, leaving more funds in banks for private sector lending.
Therefore, the government believes that ¨business people will be most supportive of the tax system,¨ he said.
¨Business people are the people who are most aware of the state´s current monetary and financial situation,¨ he added.
In his 100th radio address, President Nasheed noted the local business community´s contribution to the development of the nation, stating ¨their hard work have substantially increased the country´s prosperity.¨
Further, emphasizing the importance of a strong private sector to facilitate national development, the President noted the need to reform the legal framework that governs private sector to promote private commercial activities.
The President said, as the government was proposing legislative amendments to introduce new revenue measures, the government would also propose to the People´s Majlis, reforms to promote and create an environment conducive to private sector.
In addition, the President repeated his comments on Thursday, at the press conference to provide details of economic reforms, that land should be made a commercially transferable asset to allow more profitable private investments.
In this regard, he revealed that the government would seek to amend the legislations that regulate mortgaging to facilitate funding opportunities available through commercial banks.
In his radio address today, the President underlined that the economic reforms being introduced by the government have been successfully implemented in other countries similar to the Maldives. He further stressed that the government consulted with international financial institutions, friendly countries, local business community, industry associations, and political parties in drawing up the economic reform programme.
The President reiterated that the government was confident that the economic reforms – new revenue measures and taxation reforms – would open new paths to substantially increase the country´s wealth and prosperity.
President Nasheed´s radio address today is his 100th weekly radio address.