A ruling party lawmaker has slammed a damning World Bank report on the state of the Maldives’ economy as an act prompted by jealousy.
MP Riyaz Rasheed of the Progressive Party of the Maldives said Wednesday that the World Bank “is jealous of the progress and development” brought by President Abdulla Yameen’s administration.
The report had expressed concern over high public debt owing to large infrastructure projects, widening fiscal and current account deficits and high youth unemployment.
The economy slowed to just 1.9percent last year, the weakest showing since the global recession of 2009, the report said. Growth was dragged down by a slump in tourist arrivals and a number of cancellations following a state of emergency in November, it added.
Ministers meanwhile called a press conference on Wednesday over media coverage highlighting the high risk or external debt distress, lambasting what they called irresponsible reporting.
Youth Minister Ahmed Zuhoor characterized the report as “proof that the government’s megaprojects are indeed happening,” while Fisheries Minister Mohamed Shainee said the government was aware of risks posed by high borrowing, but remained confident it could service the debt. The loans taken for airport expansion and a bridge between the capital Malé and the airport was concessionary, he stressed.
Finance Minister Abdulla Jihad added: “We can pay back these are loans without placing a burden on the state budget. The outstanding debt may be high, but servicing those debts would not be difficult for the state.”
Heaping praise on Yameen’s economic vision and expertise, Economic Minister Mohamed Saeed and Tourism Minister Moosa Zameer said the infrastructure projects as well as tourism expansion in the coming years would contribute to loan re-payment.
The expansion of the airport is to cost US$800million, while the bridge is a US$210million project.
The tourism minister said 11 resorts had been opened since Yameen assumed office in 2013, and the government hopes to see 39 more resorts in operation by the end of 2018. This would add jobs and contribute to economic growth, he said.
Youth Minister Zuhoor said: “Not all of these investments will raise adequate revenue for the government. But as per the president’s vision, they are tied to other revenue-raising measures.”
“It does say the debt-to-GDP ratio will rise, but we know how to reduce this,” Shainee said, expressing confidence that the current GDP of US$6,500 could be doubled to US$12,000 by 2018.
The ministers were confident of 6.4percent economic growth this year and said the government is now heading towards a balanced budget. World bank estimates, however, were different.
The report forecast moderate growth of 3.5percent this year, rising to 4.6percent in 2018. The deficit, at -8.4percent last year, is expected to widen further, to -13.3 percent this year and -18.9 percent in 2018.
Public debt could rise from 73 percent of GDP this year to 120percent by 2020, the bank warned, urging the Maldives to reign in expenses and implement sequencing of mega projects.
But ministers dismissed concerns. claiming infrastructure development and added tourist beds would “transform” the Maldivian economy.
Resort sector bed capacity would increase by 12,000, while the expansion of the airport would cater to some seven million tourists. Arrivals currently stand at a million. The government is also planning on constructing and upgrading regional airport, they said.
Both the bridge and the airport are expected to be completed by 2018, the end of Yameen’s current term.
“We can mitigate the risk by developing infrastructure,” Zameer said. “I am saying we have mitigated all of those risks… The risk of failure is not there.”
Zuhoor meanwhile said the government has no plans to reduce its wage bill or target subsidies.
“Today’s president does not want to adopt policies that would affect the people, just because the World Bank says so,” he said, despite the government cutting electricity subsidies earlier this year.