In December 2006, Maldives’ Finance Minister, Gasim Ibrahim, submitted the budget of 2007. The $940 million budget is the highest budget ever made in the country's history. It is equal to eighty percent of the country’s GDP.Asian Development Bank and International Monetary Fund have cautioned Maldives about its growing expenditure. The country is still suffering from the damage caused by 2004 Tsunami.
Gasim Ibrahim is very optimistic that his government will achieve the revenue margin set in the budget; however, IMF and Asian Development Bank did not share the same optimism. In their annual statement, IMF said that Maldives budget is based on “optimistic revenue assumption.” IMF and ADB are afraid that the budget might create a huge financial deficit which will hamper the economic growth of the country. Minivan News reports:
In December Finance Minister Gasim Ibrahim unveiled a record breaking $940 million budget, equal to eighty percent of the Maldives’ estimated GDP for 2007.
With increasing anxiety about whether the budget’s revenue predictions will be realised, the ADB has warned “the wide gap between expenditure and revenue cannot be sustained in the medium term.”
Like the World Bank, ADB says increased expenditure is not due solely to tsunami reconstruction, but also government policies, “to increase public sector wages and continue power and water subsidies in Malé.”
Maldives government is increasing its expenditure after defense and security. Aside from that, the expenditure of government has increased significantly.Mr. Gasim dismissed the claim of IMF and requested people to support the budget.
To me it looks like, Maldives' government is taking very high risk. If they fail to reach their goal the people would have to bear the burden of the failure and the ultimate result of that failure will be political chaos. I hope that government reevaluate the budget and make necessary amendments by setting practically achievable goals.
Useful links:
http://www.minivannews.com/news/news.php?id=3657
http://www.minivannews.com/news/news.php?id=3515
http://www.minivannews.com/news/news.php?id=2687
http://www.minivannews.com/news/news.php?id=2683
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