Deficit will increase at current pace on public payroll cuts: IMF
16 Jun 2010, 7:26 PM
The International Monetary Fund’s (IMF) Country Report for the Maldives, published earlier this month, pegs the country’s fiscal deficit in 2009 at 26.25 percent and notes that while the “political climate for public expenditure cuts remains difficult… the coming months will be a crucial test of [the government’s] ability to prevail.”
The report provides a neutral assessment of the country’s economic condition and its progress towards economic reform and reduction of its significant budget deficit.
It notes that the authorities “have taken remarkable steps to bring about the very large fiscal adjustment”, most explicitly, salary cuts to government employees of between 10-20 percent, “something seen in just a handful of countries worldwide”, alongside “a 40-60 percent increase in electricity tariffs.”
The IMF also lauded the governments “initiation of a program for public employment reform that will ultimately reduce the government’s payroll by one-third”.
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