The Civil Service Commission (CSC) has announced today it is to reimburse money deducted from the earnings of government employees between January to December 2010.
The wage repayments, amounting to Rf443.7 million (US$28.8 million), will be disbursed in monthly instalments over twelve months from July 1 this year, the CSC confirmed in a press release. This money has not been accounted for in this year’s state budget, the deficit of which has already drawn concern from the International Monetary Fund.
This reduction in civil servant pay was introduced by the previous government in an attempt to manage a financial crisis back in 2009. The initial deduction, agreed between the Finance ministry and the CSC, was only due to last for three months until the government’s income had risen above Rf7billion (US$544 million).
However, after the Finance Ministry refused to restore wages to the previous level, the CSC took the case to the courts.
After the dispute between the government and the CSC was submitted to legal adjudication, the Civil Court ruled that the Finance Ministry did not have the authority to reduce the salaries, a cut of up to 20 percent in some cases. The CSC at the time interpreted this as a decision to restore the deducted salaries, a decision upheld by the High Court in May of last year.
“Hidden political agenda”
At the height of the discord between the two departments in February 2011, the Finance Ministry claimed that certain members of the CSC were using the issue as a cover to attain “a hidden political agenda.”
“The CSC is making it difficult for the government to implement the necessary economic policies [and are therefore] indirectly trying to damage the economy,” the Ministry said in a statement at the time.
“[The CSC’s actions] will result in an increased budget deficit, make it difficult to maintain the value of the rufiyaa against the dollar and will damage the Maldivian economy, affecting each and every citizen of this country.”
The Finance Minister Abdullah Jihad recently announced that he would return the budget for this year to parliament as the current rate of expenditure would leave a deficit of Rf2 billion. Jihad could not be contacted by Minivan News at the time of going to press regarding the impacts the reimbursement might have on state expenditure.
Ahmed Nazim, head of the Parliamentary Financial Committee, was also unavailable for comment.
Concerns over the level of spending on civil servants in the Maldives are well documented. A 2010 World Bank report entitled “how did the Maldives get into this situation?” noted that “the origin of the crisis is very clear… the wage bill for public sector employees grew dramatically in a very short time.”
Increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, “by far the highest increase in compensation over a three year period to government employees of any country in the world,” the report noted. The report showed spending on civil servants’ salaries rising from Rf2billion to nearly Rf5billion between 2007 and 2009.
Pay cuts for civil servants were just one of the many deficit reduction measures suggested by the IMF during its meetings with the government of President Mohamed Waheed Hassan earlier this month.
“The expenditure has not been under control since 2009. It has been rising, and we have been [issuing] warnings since then,” Haveeru reported the Chief of the IMF mission in the Maldives, Jonathan Dunn, as telling parliament at the time.
The governments attempts to reduce spending have seen a Finance Committee investigation into the Aasandha health care scheme which accounts for around ten percent of the government’s budget. It has been described by it’s chairman, Ahmed Nazim, as a “hole in the pocket of the government.”
The Maldives Inland Revenue Authority (MIRA) recently released its figures for March, attributing a significant loss of funds to the goverment’s decision to change the way island lease payments are made. The system changed from a lump sum payment to an instalment method for lease renewals, costing the government around Rf350 million (US $23million) that month. The IMF noted that the current budget figures had not accounted for this loss of revenue.
The government also recently announced significant number of benefits and promotions being awarded within the secuity forces.
The IMF predicted dire consequences if the government’s budgetary imbalances were to cause it to exhaust its foreign reserves.
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We are very thankful to the unity government for correcting the errors made by the previous government.
Sure, lets distribute a few thousands here and there, as long as it guarantees a win for the coup government for the next election. We talk about the dire state of the economy and yet there's a bottomless budget for the civil servants, the politicians, and the MPs. Why not use this money to sustain Aasandha? Won't that benefit everyone, afterall it's public money and tax money that is being used to benefit a certain segment of the population! Why not use the money to do something that will benefit the population at large, rather than just the civil servants and their families? And the best thing is that most of the civil servants don't even derserve this money, for most of the time they are out having tea, chatting online, on FB and socializing and working as inefficiently as they possibly can and the CSC members sit on their high paid seats, and do nothing at all to monitor these employees! What a way to silence the civil servants and buy them off!
Where is the regime to dig out US$28.8 million from? Unless I am mistaken, the only place where they can draw this money is from the country's strategic reserves! Now, is that fair or just?
This is the road to bankruptcy. The country and its people need to learn to spend within their means first. Mistakes like this will lead to an immediate jump in inflation as well as serious pressures on the US$.
No one cares as long as personal pockets are lined up for the short term. That's a dangerous move, since those pockets are going to have very big holes in the near future as the country heads towards bankruptcy.
this is downright bribing of the civil servants! shame shame shame! and this is only temporary gratification of the masses. the buying of votes.
The Roadmap to financial disaster
There is a way around this.
streamline the workforce and do it quickly. unproductive workers contract shall not be renewed when it comes to end after one year. and they need not be paid compensation. resort workers are also laid off like this, the govt does not need to be a cashcow for everybody. it is already too bloated and full of corrupt and good for nothing people. old cogers who barely know how to spell their name...
Bribery and threats is all this regime know. They will ruin this country to stay in power.
@police guy on Sun, 15th Apr 2012 11:26 PM
"it is already too bloated and full of corrupt and good for nothing people. old cogers who barely know how to spell their name…"
The regime needs them to prop itself up and keep afloat. This is nothing but a fight for survival by the regime...