Govt targets MVR 2.8 billion from land sales, transfer fees by 2029

The Maldives Monetary Authority (MMA) has warned that the government could face difficulties meeting its fiscal targets if projected revenue from land sales and land transfer fees, intended to support economic diversification, falls short of budget estimates.

The central bank raised the concern in its technical advice submitted to Parliament on the proposed state budget for 2027.

According to the MMA, the government has outlined plans in the budget to develop real estate into one of the Maldives' main economic sectors by 2040 as part of efforts to diversify the economy.

Tourism remains the country's largest industry, accounting for an estimated 70 per cent of gross domestic product (GDP) through direct and indirect contributions.

Under the government's economic diversification policy, the budget forecasts revenue from land sales and land transfer fees of MVR 1.2 billion in 2028 and MVR 1.6 billion in 2029.

The combined revenue target for the two years amounts to MVR 2.8 billion.

However, the MMA cautioned that failure to achieve these projections could affect the government's ability to maintain one of its fiscal targets: keeping government revenue at no less than 32 per cent of GDP.

The central bank recommended developing a national plan to guide the expansion of the real estate sector, supported by a monitoring mechanism to assess progress and implementation.

The MMA stressed the importance of ensuring that the government's objectives for the sector are achieved.

The central bank also highlighted the Maldives' dependence on tourism, noting that a substantial share of government revenue is directly or indirectly linked to the industry.

It referred to increases in global oil prices and disruptions to international travel associated with the conflict in the Middle East as examples of external developments that could affect the Maldivian economy.

According to the MMA, reducing dependence on tourism through economic diversification would help limit the impact of such external shocks.

While acknowledging the government's plans to expand the real estate sector, the central bank recommended examining opportunities to develop and diversify the country's financial services sector.

The MMA called for cooperation between the government and the central bank to identify measures that could support the expansion of financial services and contribute to economic diversification.

It also recommended that both institutions work together to implement reforms outlined in the MMA's strategic plan for financial sector development.

The central bank said cooperation would be necessary to achieve the objectives and targets established under the plan.