2012 would be a difficult year for the Maldives economically, says Yamin

Abdullah Yamin, Parliamentary Group Leader of the newly formed Progressive Party of the Maldives (PPM) has said that 2012 would be an economically difficult year for the Maldives.

MP for Mulaku Constituency, who was the Minister of Trade at the former Government, said the press today, in a meeting held at PPM Office, that inflation will rise, and people would have to undergo much hardship due to economic downturn. He said that the reasons for increase in prices would be the increase of Goods and Services Tax (GST) from 3.5% to 6% with the beginning of the new year, and continued taxes on imported goods.

The Government had previously said that this year, inflation would drop, and people would be able to buy their daily goods and services at cheaper prices. However, Yamin said that it is not possible, as the budget would not be a duty-free budget as the Government claims. He said that government accounting records showed duties to be levied even during this year, and also that GST would be more than customs duties previously levied.

“GST would mean that consumers would have to pay the Government much more than levied under the customs duty system. How can traders lower their prices if increased GST just replaces lower percentages of duties?” Yamin asked.

Yamin also said that one of the biggest problems this year would be shortage of US Dollars, the major foreign currency that is used in the Maldives. He said that the black market of Dollars would expand, and that the current rate of MRF 17 per dollar in the black market would increase. He also said that the Government would be forced to further devalue Maldivian currency by mid 2012.

Yamin also said that the budget deficit, which would necessitate taking of additional loans, would pose additional problems for the nation’s economy.

The budget for this year is some 17 billion Rufiyaa, while the Government’s income has been estimated at 5 billion less. Yamin said that the recent resignation of the Minister of Finance, the State Minister of Finance, and Financial Controller would mean further problems in managing the budget and directing the economy at the right direction.