Debt Increased as a Result of Assisting Pandemic-Affected Businesses: Finance Minister

Minister of Finance Ibrahim Ameer remarked that the state debt increased after the government provided financial support to businesses impacted by the COVID-19 outbreak and that the only alternative is to raise taxes.

Minister Ameer highlighted the government’s efforts to combat the COVID-19 pandemic, which had lessened its detrimental impact on businesses and the economy, while addressing the Parliamentary Committee of the Whole House. He stated, however, that the government must pay the cost of granting debt moratoriums and loans to small and medium-sized firms (SME), large corporations, resorts, and individuals, despite a decline in state revenues.

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In addition, Minister Ameer emphasized that the gross domestic product (GDP) decreased by 33 %in 2020 but rebounded by 41.6% in 2021. However, he stated that the government is currently having difficulties in obtaining financial aid and must do everything required to boost revenue.

The government has presented a tax hike amendment law for 2023. In an effort to raise state revenue, the proposed amendment would increase the Goods and Services Tax (GST) from 6% to 8% and the Tourism Goods and Services Tax (TGST) from 12% to 16%.

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