Managing Daily Tourism Tax Revenue Risk for the Maldives

International tourism is widely regarded as the principal economic activity in Small Island Tourism Economies (SITEs) (see Shareef (2004) for a comprehensive discussion). Historically, SITEs have been dependent on international tourism for economic development, employment, and foreign exchange, among other economic indicators. A unique SITE is the Maldives, an archipelago of 1190 islands in the Indian Ocean, of which 202 are inhabited by the indigenous population of 261,000 and 89 islands are designated for self-contained tourist resorts. The Maldivian economy depends entirely on tourism, and accounts directly for nearly 38 per cent of real GDP. Employment in tourism accounts for 20 per cent of the working population and 65 per cent of foreign exchange earnings.