Ameer to World Bank: Inflation contained; can manage fiscal challenges

Finance minister Ibrahim Ameer on Wednesday hit back at the World Bank's forecast that the country's finances could worsen.

The latest issue of updates by the bank highlights the reasons for the deteriorating financial health of the country.

According to the report, the country's real GDP growth is expected to be 6.6% this year.

Ameer has hit back at previous estimates by the World Bank that the country's finances could worsen.

This time too, Ameer hit back at the World Bank report's on economic growth and high inflation.

"The World Bank has projected the country's economic growth forecast to be lower than before, due to the base effect in calculations as GDP growth in 2021 is higher than what the World Bank had predicted earlier," he said.

"While this is at a time when global commodity prices are on the rise, the impact on the country is less compared to most of the neighbouring countries."

The World Bank report has projected that the country's inflation is likely to rise to 5.7% this year on the back of higher Goods and Services Tax (GST) rates.

Responding to this, the minister said the high inflation rate remains the same.

"One of the reasons why inflation has remained stagnant is the subsidy given by the government to bring down fuel, power and food prices. The cost of subsidies has gone up significantly with rising global prices," the minister said.

The World Bank report said that the continued expansion of the tourism sector was an encouraging factor for the country's economic growth.

The minister said tourist arrivals so far this year have increased by 21.5% compared to 2022.

"It is expected that a record number of tourists will visit the country this year. Therefore, economic growth will be higher than the current projections," the minister said.

In order to reduce the burden on the entire finances, the spending system needs to be streamlined and subsidies reduced, the minister said, adding that the world's delicate situation, including large borrowings from abroad and the fragile global situation, has severely impacted economic growth: