Budget in Statistics 2015.Pdf
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GOVERNMENT BUDGET IN STATISTICS FINANCIAL YEAR 2015 MINISTRY OF FINANCE & TREASURY MALE’ MALDIVES Table of Contents Executive Summary 01 Maldives Fiscal & Economic Outlook 03 The Budget System and Process 33 Budgetary Summary 2013-2017 39 Government Revenues 43 Glance at 2014 Budgeted & Revised Estimates 46 Proposed New Revenue Measures for 2015 47 Summary of Government Revenue (Tax & Non-Tax) 48 Government Total Receipts 2015 49 Government Revenue Details 2013 – 2017 55 Government Expenditures 61 Glance at Government Expenditures - 2014 64 Economic Classification of Government Expenditure, 2013 - 2017 65 Functional Classification of Government Expenditure, 2013 - 2017 70 Classification of Government Expenditure by AGAs, 2013 - 2017 73 Government Total Expenditures 2015 83 Project Loan Disbursements 2013-2017 97 Project Grant Disbursements 2013-2017 99 Public Sector Investment Program 101 PSIP 2014 (Domestic) Summary 103 PSIP Approved Budget Summary 2015 - 2017 104 PSIP Function Summary 2015 106 Review of the Budget in GFS Format, 2011-2017 109 Summary of Central Government Finance, 2011-2017 111 Central Government Revenue and Grants, 2011-2017 112 Economic Classification of Central Government Expenditure, 2011-2017 113 Functional Classification of Central Government Total Expenditure, 2011-2017 114 Functional Classification of Central Government Current & Capital Expenditure 115 Foreign Grants by Principal Donors, 2011-2017 116 Expenditure on Major Projects Financed by Loans, 2011-2017 117 Foreign Loans by Lending Agency, 2011-2017 118 Historical Data 119 Summary of Government Cash Inflow, 1998-2013 121 Summary of Government Cash Outflow, 1998-2013 122 Functional Classification of Government Expenditure, 1998-2013 123 1 Maldives Fiscal and Economic Outlook 2013-2017 1. Introduction The paper outlines the fiscal and economic situation of Maldives for the fiscal year 2014 and the outlook for the three years ahead. The paper consists of major sub components comprising of Real sector, Governments fiscal policy and balance of payments. 2. Gross Domestic product Economic growth is estimated using Gross Domestic Product (GDP). Gross Domestic Product (GDP) is the market value of all final goods and services produced within the borders of a nation, in a given year. It is the total value added for all goods and services produced in a country. GDP growth rate is an important indicator of a nation’s economic growth and standard of living. GDP can be shown in two ways. One of which is Nominal GDP (GDP at market basic prices). Second, Real GDP or GDP at basic prices. Currently, Real GDP is calculated at 2003 base prices. 2.1 Nominal GDP (at market prices) Nominal GDP is measured in market prices; that is the prevailing prices in a given year. The difference between Nominal GDP and Real GDP are changes in the price levels. GDP at market prices is calculated after adjusting for tax and Subsidies. GDP at market price in an important indicator that has been widely used all over for comparison purposes in relation to budget deficit or government debt. However up until 2014, only GDP at basic prices have been used for such comparisons. 5 Ministry of Finance & Treasury Maldives Fiscal & Economic Outlook, 2013-2017 Table 1: Differences in Nominal GDP at Basic Price and Nominal GDP at Market Price, 2010 - 2017 (million Rufiya) 2010 2011 2012 2013 2014 2015 2016 2017 Nominal GDP (Basic Price) 27,317 31,584 34,177 35,451 39,505 43,383 46,392 49,211 Adjustments for tax and Subsidies 2,539 4,347 4,765 6,118 7,132 8,858 10,115 11,423 Nominal GDP (Market Price) 29,856 35,946 38,958 41,569 46,637 52,241 56,507 60,634 Source: National Bureau of Statistics GDP at market prices include only the taxes on products, i.e. import duty and Good and Services taxes (GST). Business Profit taxes (BPT) have not been included in the calculation of GDP at market prices. The subsidies include food subsidies, water subsidies and preschool subsidies. The amount for taxes less subsidies in the year 2013 was Rf 6,118.0 million which was an increase of 28.4%. This amount is estimated to increase to Rf 7,132.0 million in 2014 and Rf 8,858.0 million in 2015. Hence, nominal GDP has increased to Rf 52,240.7 million and this is a 12% growth for 2015 compared to the 2014 nominal GDP. Due to the introduction of new taxes in the last three years, the difference between GDP at market price and GDP at basic has increased significantly. Thus, budget deficit as a percentage of GDP at market prices has declined. 2.2 Real GDP (2003 constant prices) As Real GDP excludes the changes to prices of goods and services it is the most appropriate measure to estimate the economic growth of a country. The difference between nominal and real GDP is the price changes in the economy. In 2013, real GDP growth was at 8.8% (Chart 1) and the sectors which contributed most to this growth rate are tourism, trade and communication. The sectors grew by 9.0%, 10.8% and 10.3% respectively. These are higher growth rates than previous estimates. Tourism being the largest 6 Ministry of Finance & Treasury Maldives Fiscal & Economic Outlook, 2013-2017 contributor to GDP, the increase in growth rate of previously estimated 5.5% to 9.0% was the main reason that GDP growth rate in 2013 was higher than previous estimate. Chart 1: GDP Growth Rate, 2007 – 2017 % 14.0 12.0 12.2 10.0 10.6 10.5 8.0 8.8 8.5 6.0 7.1 7.1 6.5 6.9 4.0 2.0 3.0 0.0 -2.0 -4.0 -3.6 -6.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: National Bureau of Statistics According to the available data in 2014, GDP is estimated to grow at 8.5%. The sectors which contributes highest to this growth rate are tourism, construction, transport and communication (chart 2) 7 Ministry of Finance & Treasury Maldives Fiscal & Economic Outlook, 2013-2017 Chart 2: Gross Domestic Product by kind of activity, 2015 Agriculture and mining Fishing 29.9% Manufacturing 10.9% Construction 10.9% Tourism 9.3% Transportation 7.3% 8.7% 3.2% Communication Financial Services 2.3% 2.9% Real Estate 1.3% Government Administration Source: National Bureau of Statistics GDP for the future years has been projected using past trend for the indicators used in the extrapolation of GDP and how these indicators will change in the future. GDP growth rate for 2015 is projected to be 10.5%, 2016 is 7.1% and 2017 is 6.9%. 8 Ministry of Finance & Treasury Maldives Fiscal & Economic Outlook, 2013-2017 2.2.1 Tourism Tourism industry of the Maldives grew by 9.0% in 2013 while tourist arrivals in this year grew by 17.4%. Most number of tourists visited to Maldives was from China and since average duration of stay for Chinese tourists is lower than European tourists, tourist bed nights grew by 9.2% in 2013. According to the available data in 2014, tourism industry is estimated to grow at 6.8% and tourist arrival in this year is estimated to be 1,256,236 tourists. The growth of tourism industry in 2015 is projected to be 8.3% with 1,437,211 tourists arriving to Maldives. Moreover, the growth rate of this industry in 2016 and 2017 is expected to be 6.7% and 5.4% respectively. On average, the contribution to GDP by tourism sector is 29.4% in 2013 and as well as in 2014. Chart 3: Tourism Growth Rate, 2007- 2017 % 20.0 15.8 15.0 9.7 9.2 9.0 10.0 8.3 6.8 6.7 5.4 5.0 3.5 -0.1 0.0 -5.4 -5.0 -10.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: National Bureau of Statistics 9 Ministry of Finance & Treasury Maldives Fiscal & Economic Outlook, 2013-2017 2.2.2 Construction Construction industry declined by 2.5% in 2013 (chart 4) and this growth rate is lower than previously estimated growth rate. The main reason for this decline in construction sector is due to difficulties faced in importing aggregates from India which is the largest importer of aggregates to Maldives. The value of building materials is the main indicator used to estimate the growth of this industry and there was a decline in imports of building materials by 9.0%. Construction sector estimated to recover in 2014 after the decline in 2013. According to the available data in 2014, import of building materials is estimated to grow by 30.0% and hence value added for construction sector is estimated to grow 20.6%. The main reason for this growth is the resolving of problems regarding availability of aggregates from India which has lead to an increase of construction projects. 2.2.3 Transport Transport industry includes sea transport, air transport, land transport and auxiliary transport activities. This industry is estimated to grow at 11.2% in 2014 and 8.3% in 2015 and the main contribution to this growth is from air transport industry. Since tourism and air transport are positively correlated, high growth rates in tourism industry leads to high growth in transport industry too. 2.2.4 Manufacturing Manufacturing sector includes manufacture of fish products, manufacture of food products (excluding fish), beverages, furniture, cement products, boat building and printing & publishing. Following a negative growth rate of 5.6% in 2013, this sector is estimated to grow at 2.0% in 2014.