A decline in tourist arrivals compared to last year has begun to negatively impact state revenue.
According to the Finance Ministry's latest Fiscal Development Report, Tourism Goods and Services Tax (TGST) collections stood at MVR 8,061 million as of the end of last month. This represents a decrease of MVR 110.5 million compared to the MVR 8,172.4 million collected during the same period last year.
The latest statistics from the Tourism Ministry show that 1,637,890 tourists have visited the Maldives as of yesterday. This is a decrease of 58,940 arrivals compared to the corresponding period last year.
After breaking arrival records in the first quarter of this year, the momentum of the tourism sector slowed down starting from the second quarter, following the onset of conflict involving Iran in the Middle East.
Due to the conflict, air travel was disrupted in key transit hubs for Maldivian tourism, such as the UAE and Qatar. Although flights later resumed and there were expectations that tourism would normalise in certain months, that recovery has yet to materialise.
The national budget for this year was formulated based on an estimate of 2.4 million tourist arrivals and a projected TGST revenue of MVR 11.4 billion.
However, to reach the annual arrival target, the Maldives must attract 800,000 tourists over the next three months. This would require an average of 268,000 tourists per month.
This figure exceeds the current record for the highest number of arrivals in a single month in Maldivian history, which was set in February this year with 254,556 tourists.
The likelihood of achieving the tourist arrival targets set in the budget remains very low. This also increases the probability that TGST revenue will fall short of initial projections.
In addition to TGST, other revenue streams tied to tourist numbers—such as the Green Tax, Airport Departure Tax, and non-tax revenue, including the Airport Development Fee—will also be affected. As a result, there is a possibility that the state will not realise the total projected revenue of MVR 40.3 billion for this year.
