World Bank has projected that inflation in the Maldives will rise to 7.5 percent in 2024.
World Bank has projected that inflation in the Maldives will rise to 7.5 percent in 2024.
The body cites planned subsidy reforms for the year, and their spillover effects, as the main cause for this increase.
These projections were published in the World Bank's report, Maldives Development Update: Scaling Back and Rebuilding Buffers, May 2024.
The government of Maldives has announced targeted subsidies, with the Ministry of Finance having earlier stated that these efforts will commence in June this year.
The State Budget for 2024 has an allocation of MVR 600 million for targeted subsidies. As per the budget, changes will be brought to the way blanket subsidies are currently provided for electricity, fuel, staples, water and sewerage services. Instead, the subsidy provision will be changed to a direct transfer system. With this, spending on subsidies is expected to be brough down to MVR 2.5 billion.
The World Bank predicts that inflation will then decline to 6.5 percent in 2025, and further to 5 percent in 2026, although they caution that it is subjects to risks that may be caused due to oil price shocks or global production cuts.
In 2023, inflation in Maldives was at 2.9 percent in the Male' area.
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