Govt rules out immediate austerity despite MVR 85-90mn revenue shortfall

Minister of Finance and Planning Moosa Zameer has stated that the government expects a revenue shortfall of between MVR 85 million and MVR 90 million due to the ongoing conflict in the Middle East.

The minister made the statement on Sunday during a press conference held by a Cabinet Committee formed to address the economic impact of the situation.

According to the minister, 17 flights from the Middle East to the Maldives have been suspended, contributing to a decline in tourism-related revenue.

Zameer said that while precise figures are still being assessed, preliminary estimates prepared in collaboration with the Maldives Monetary Authority (MMA) and the Maldives Inland Revenue Authority (MIRA) indicate a shortfall within the projected range.

“The conflict is nearing one month in duration. Our initial projections indicated that if the situation persisted for a month, the government would face a revenue loss between MVR 85 million and MVR 90 million,” he said.

He added that the difference between projected and actual figures will be confirmed in the coming week, but the estimates are expected to remain within this range.

The minister also stated that the government has not introduced immediate expenditure cuts. He said some countries have reduced working hours and operational days to manage costs, but noted that the Maldives had already experienced a period of administrative closure during the last ten days of Ramadan and the Eid holidays.

“The Maldives was already in a period of administrative closure when the conflict intensified,” he said.

Zameer said that immediate reductions in spending are not feasible given existing commitments. He identified expenditure on Aasandha, healthcare services, and essential medicines as areas that cannot be reduced.

He also stated that reducing fuel subsidies presents challenges. The minister said that allowing fuel prices to increase without intervention would place a burden on the public, particularly given the need for travel to access services such as healthcare.

“Unlike some countries that allowed fuel prices to rise by withdrawing subsidies, doing so here would have a direct impact on the public,” he said.

The minister added that the government is reviewing development projects to identify areas where spending can be adjusted without affecting essential services.