Male’, Maldives – Maldives has become the first small island state and the second country in Asia to undertake Fiscal Transparency Evaluation (FTE).
Undertaking the FTE signifies that the Government of the Maldives recognizes the importance of transparency in fiscal management and in delivering on its ambitious policy agenda, while responding to current challenges within a tight fiscal environment. Overall, the FTE shows that Maldives has made considerable progress in improving fiscal transparency in recent years.
There are three pillars of the FTC. They are:
- Fiscal Reporting
- Fiscal Forecasting and Budgeting
- Fiscal Risk Analysis and Disclosure
FTE provided recommendations for Maldives to further enhance its fiscal management and transparency by means of improvements across each of the three pillars. These include of improving the timeliness and reliability of the year-end consolidated financial statements and enhancing the transparency of tax expenditure by improving their reporting and coverage.
FTE also suggests to establish clear fiscal policy objectives to effectively guide the fiscal stance and to Enhance the spending efficiency on public investment projects and the transparency around project selection and procurement along with improving the analysis and disclosure of fiscal risks and many more.
Although the Maldives’ fiscal forecasting and budgeting practices meet basic or good practices in many areas and compare favorably with global averages, FTE states that the Fiscal forecasts and budgeting processes need further strengthening to provide credible projections of the evolution of the public finances and support the achievement of the government’s fiscal objectives, thereby ensuring medium-term fiscal sustainability.