World Bank Projects 5.7 Percent GDP Growth with New VIA Terminal Completion

The World Bank has projected that the completion of the new terminal at Velana International Airport (VIA) will contribute to real GDP growth of 5.7 percent in 2025.

In its latest development update, the World Bank stated that real GDP growth is expected to pick up slightly over the medium term, supported by an increase in tourist arrivals following the completion of the new terminal, which is anticipated by mid-2025. Growth is projected at 5.7 percent in 2025, moderating to 5.3 percent in 2026 and 4.7 percent in 2027.

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The update noted that the baseline projections for medium-term growth are slightly higher than those forecast in September 2024, reflecting stronger performance in the tourism sector. However, the baseline outlook assumes only limited fiscal consolidation and considers potential adverse effects arising from global trade uncertainties and the risk of a global economic slowdown.

The World Bank also warned that the fiscal deficit is likely to remain elevated over the medium term, contributing to a further rise in public debt. Debt service costs are projected to increase significantly.

According to the update, the government has introduced several revenue mobilisation reforms in 2024. These measures include revisions to the Tourism Goods and Services Tax (TGST), the departure tax (DPT), the airport development fee (ADF), and the green tax. However, it emphasised that implementing reforms to reduce expenditures, as outlined in the government’s homegrown fiscal agenda for 2024, will be critical to achieving fiscal consolidation.

The World Bank stressed the importance of phasing out blanket subsidies and replacing them with a targeted cash transfer scheme to strengthen fiscal sustainability and enhance the progressiveness of the social protection framework.

Currently, the terminal at Velana International Airport has the capacity to accommodate 1.5 million passengers annually, while the Maldives welcomed more than 2 million tourists last year. As a result, the airport is operating well beyond its designed capacity.

In contrast, the new terminal, covering 78,000 square metres, will be able to handle over seven million passengers each year. Equipped with modern facilities, the terminal is scheduled to open in October 2025, according to government plans.