Government expenditure for 2014 is estimated at MVR 18 billion while over MVR 24 billion has been budgeted for 2015. This is an MR 6 billion increase in expenditure. How will this affect our economy? As a country where almost everything is imported, increase in government expenditure will increase demand for foreign currency. A huge amount of budget is for PSIP projects where this will bring a construction boom and import of construction materials will increase. Also duty exemption for resort upgrading/renovation projects means increase in import of construction and related materials. The increase in imports will increase in demand for foreign currency. Expect shortage of foreign currency if prior measures are not taken. The worst impact will be for the low income earners in the form of low purchasing power. Increase in government expenditure will not benefit majority of population in the form of disposable income as PSIP projects will mainly earn for businesses unlike increasing government salaries.
Posted on: Wed, 03 Dec 2014 06:47:26 +0000
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