Recent Advances Maldives Beach Resort

Q1 2021 saw real GDP shrink by 8.6% y-o-y, a substantial improvement over previous quarters. Tourism recovered (-11.4% y-o-y), with India and Russia making up for lost Chinese visitors. Delays in public investment projects caused a 39.5% decline in construction activity. Despite the COVID-19 outbreak, tourism has remained strong. From January to August 2021, Maldives welcomed 755,966 tourists or 67% of the total in 2019. Tourists staying longer means bed nights are up 82 percent year-on-year. The Maldives’ distinctive ‘one island, one resort’ approach has increased its attractiveness. Ninety-three percent of resort employees and around 60% of the population are completely immunized. Prices rose 2.3 percent y-o-y in Q2 2021 due to increased activity and low base effects. Prices climbed 2.6% quicker on the atolls than in Male (2.1 percent). Higher global oil prices led to three rises in local retail gasoline prices in 2021.

A travel receipt of US$1.5 billion in H1 2021 was just 9% below the same period in 2019. To balance the trade deficit, tourism-related services imports certainly rose. Imports grew faster than exports (14.9%), as food and gasoline imports increased to meet visitor demand. The de facto fixed exchange rate stayed constant. At the end of August 2021, gross official reserves were US$874.3 million, or 3.1 months of expected imports. Usable reserves (after netting short-term foreign currency obligations to local banks) are assessed at 25%. Consumption rose 3.2% year on year, while capital spending stagnated. It had scarcely spent a third of its yearly capital expenditure by August.At the end of March 2021, the total public and publicly guaranteed debt were $5.6 billion, or 125% of anticipated GDP. It helped decrease rollover risks by extending the maturity of most of the US$250 million Eurobond due in June 2022. However, refinancing proved costly, and the Maldives remains vulnerable to foreign debt problems. According to the 2019 household survey, poverty rose from 3.8 percent in 2019 to 14.3 percent in 2020. Government stimulus efforts likely helped cushion the damage.

The provision of goods and services in the Maldives is subject to Products and Services Tax (GST). It is levied at a rate of 6% on the total value of the goods and services. The provision of tourism-related products and services is subject to a tax of 12 percent on the value of the goods and services provided.If an individual is the receiver of goods and services provided by a registered person, the individual may claim an input tax credit regarding the GST individual paid on the goods and services purchased. The input tax obligation may be offset against the output tax liability, and the net amount will be due as GST to the Maldives Inland Revenue Authority, which is a government agency (MIRA)