World Bank praises Maldives for 'unpopular, but good' fiscal measures

A top World Bank official on Thursday applauded the Maldivian government’s efforts in pushing economic management measures despite their unpopularity.

The government had pushed a bill through the parliament to increase general Goods and Services Tax (GST) from 6% to 8% and Tourism GST or T-GST from 12% to 16%. With the bill now ratified by the president, the tax increase will come into effect from January.

Martin Raiser, the World Bank Vice President for South Asia, paid a courtesy call on President Ibrahim Mohamed Solih on Thursday. 

According to a statement issued by the Maldivian President's Office, where the meeting took place, the president praised the World Bank for its continuous support and assistance, which contributed to the growth of the Maldives since joining the World Bank.

President Solih and Raiser spoke of the constructive relationship between the Maldives and the World Bank.

The president also highlighted the economic management measures taken under the advice of the World Bank.

The President's Office said Raiser applauded the Maldivian government’s efforts in pushing economic management measures despite their unpopularity, saying it was a good decision. He also highlighted that it is prudent for the Maldives to make these choices and expressed hope for success, the office added.

"Raiser also offered the World Bank’s support and assistance to the Maldives to revitalise the economy. He then outlined the Country Partnership Framework, which mainly focuses on economic resilience, increased financial investments, and building human capital," the statement read.

The Washington-based development bank had earlier backed the tax hike, but called on the government to adopt more prudent debt management strategies and cut expenditure, especially on non-essential large-scale infrastructure projects.