The Maldives government is re-prioritizing its development initiatives and implementing strict fiscal measures, President Ibrahim Mohammed Solih said, a move he said will help mitigate the distress on the archipelago’s economy caused by the war in Ukraine.

Besides the high global commodities prices, and rising fuel prices, the Maldives’ economy is also directly impacted by the downturn in its tourism industry caused by the Ukraine war. The number of tourists and tourism revenues both are declining, Solih said.

Prior to the war, Russia was the top source market for its tourism. But the number of tourists has been declining as the war progressed, Solih said. The government’s expenditure, subsidies, and import bills are also rising.

The government, he said, is considering all factors to re-prioritize development initiatives and adjusting its fiscal and economic policy to mitigate these effects. Recently, the government has also shelved the plan to reduce the land lease rent for resorts, a proposal which had been moved earlier to promote investment in the country's tourism sector. Solih said the time wasn't right to implement such a proposal at this juncture.

Known for its exotic white sandy beaches and over a thousand islands, the Indian Ocean archipelago is heavily reliant on tourism, which accounts for almost 70 percent of the state’s total revenues. Solih said the government was working on finding alternative source markets to match pre-pandemic tourism income. Debt servicing, he assured, was also on track for the period between 2023-2024.

(SAM)