Tag: ministry of finance

Finance Ministry restrictions will not obstruct Majlis polls, says EC

The Elections Commission (EC) has said that recent financial restrictions in acquiring the election budget will not have any impact on the upcoming parliamentary elections.

In all elections following the cancelled first round of last year’s presidential elections, the Ministry of Finance and Treasury have not released in bulk the total budget required for each election.

The ministry has instead been required to pays bills and release funds for individual requests after having reviewed if the expenditure fits the criteria of the programme.

Following yesterday’s second EC advisory committee meeting in preparations for the March vote, Maldivian Democratic Party (MDP) Spokesman Hamid Abdul Ghafoor said that the commission owed MVR12 million in pending bills after delays at the Finance Ministry.

A ministry official explained to Minivan News that, if the ministry is convinced the money is required for elections, there will not be any restrictions in releasing the funds. Though the decision was made at policy level, he acknowledged that  it might have been due to budget shortages.

EC President Fuwad Thowfeek has said that, even with these difficulties, the commission is able to mange the expenditures with cooperation from the ministry.

“We are managing. I can assure that these restrictions will not obstruct the election. It will be carried out as planned,” said Thowfeek.
Fuwad was also of the view that the restrictions could be the result of budget shortage.

“Now we are using the office budget mostly. But the Finance Ministry is releasing funds as we spend,” he noted.

Meanwhile, the parliament’s government accountability committee is planning to question the finance ministry regarding the issue. A committee member confirmed today that a request has been made.

The EC is currently on trial at the Supreme Court on contempt charges. After using newly introduced procedures to both initiate and oversee contempt of court charges against the EC, the court has subsequently deemed privileged Majlis testimony to be admissible in the case.

The EU, the Maldivian Democratic Party, and local civil society groups have all expressed concern over the case’s effect of the EC’s independence ahead of the March 22 Majlis elections.

The commission members have now been asked to attend the Supreme Court this Saturday (March 1) at 1:30pm to sign their statements.

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PPM MPs support abolishing tourism bed tax

Deputy leader of the ruling Progressive Party of the Maldives’ (PPM) parliamentary group Moosa Zameer has supported abolishing tourism bed tax if the Tourism Goods and Service Tax (T-GST) is raised from 8 to 12 percent.

Reintroducing the US$8 tourism bed tax, which was discontinued on December 31, 2013, is among the raft of revenue raising measures proposed by President Abdulla Yameen.

However, speaking at an eleven member sub committee set up to review the government’s revenue raising measures, Zameer said that government aligned MPs now believed bed tax should be abolished if T-GST were to be increased.

Finance Minister Abdulla Jihad has denied any change in the government’s stance.

“It has not changed. And if the government does not go on with the bed-tax, the numbers will not match in the budget,” Jihad told Minivan News.

According to the Madives Tourism Act, bed tax must be abolished within three years of the introduction of T-GST. The Finance Ministry has said discontinuation of bed tax will cost the state MVR100 million (US$ 6.4 million) every month.

The government expects MVR3.4 billion (US$ 224 million) from revenue raising measures. These also include revision of import duties, raising airport departure charge for foreign passengers from US$ 18 to US$ 25, leasing an additional 12 islands for resort development, introducing GST for telecommunication services, and collecting resort lease extension in advance.

Government aligned MPs requested the People’s Majlis hold an extraordinary session during the ongoing recess, contending that failure to pass the revenue raising measures will hamper the implementation of the 2014 budget.

Meanwhile, the Maldives Association for Tourism Industries (MATI) has questioned the practicality of collecting resort lease extensions in a lump sum.

Speaking at the sub committee yesterday, Secretary General of MATI Ahmed Nazeer said only 17 out of more than one hundred resorts had paid resort lease extension fees upfront during former President Mohamed Nasheed’s administration.

Nazeer pointed out that the Civil Court had said the government could not ask for resort lease extensions upfront during Nasheed’s tenure.

Further, resort owners had amended their agreements to pay lease extension in installments during President Dr Mohamed Waheed Hassan’s administration, and as such it would be difficult to amend legislation, Nazeer said.

Then Governor of Maldives Monetary Authority (MMA) Fazeel Najeeb at the time opposed many of those measures, arguing that asking resort owners to pay lease extension fees upfront was robbing the state of future revenue for a “temporary benefit.”

Opposition Maldivian Democratic Party (MDP) MPs said changing agreements could reduce investor agreement in the country.

MDP has described the government’s revenue raising measures as excessive.

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CSC and political appointees: what they get paid (Part I)

Eight months after civil servants got their first pay cut, the political situation has deteriorated with law suits between the Civil Service Commission (CSC) and the Ministry of Finance.

President Mohamed Nasheed promised to reduce government expenditure, primarily by reducing the civil service and increasing privatisation in the country, and several privatisation partnerships are seeing the transfer of posts from the civil service to government-owned institutions.

Many opposed to the civil servant salary cuts have speculated about the amount paid to political appointees, arguing that it is unfair to cut civil servant salaries while paying large salaries and allowances to appointees. Minivan News has obtained the figures from both sides for the sake of comparison.

The civil service VS political appointees

The Maldivian government is currently spending approximately Rf 5 billion on civil servant salaries per year, approximately 74 percent of the Rf 6.8 billion budget. There are over 29,000 civil servants in the Maldives, comprising almost 10 percent of the population.

Documents obtained by Minivan News show that comparatively the government spends approximately Rf 173 million on the salaries of 354 political appointees per year, and around Rf 75.8 million on salaries for 77 MPs each year.

Labourers earn Rf 4,100 a month with the civil service, the lowest paying job in the CSC. The lowest paying job for political appointees is that of island councillors, who make Rf 12,000 a month.

The highest paying job under the CSC is that of a professor, with earnings of Rf 25,350 a month. Excluding the president and vice president, who earn Rf 100,000 and Rf 75,000 a month respectively, cabinet ministers earn Rf 57,500 a month.

The special envoy for science and technology, for example, earns Rf 45,000 a month, while an assistant professor under the CSC makes Rf 20,920 a month.

Press Secretary for the President’s Office, Mohamed Zuhair, said although political appointees get a higher salary, civil servants have better job security “since they have unlimited tenure.”

On the other hand, he said, political appointees can serve a maximum of ten years in their post, “unless they keep jumping parties,” since a government can only hold two five-year terms.

“A political appointee will fall with the government,” Zuhair added. “But a civil servant can serve for forty, fifty years.”

He said political appointees also have a more authoritative role than civil servants, justifying a higher salary: “If they are not in an authoritative role, how can they be effective?”

Zuhair said political appointees comprise less than two percent of the civil service, and they are the ones “who supervise and ensure the civil servants do their jobs.” Hence, they deserve a higher salary, he added.

Additionally, he said, not all political appointees are “appointed. Some of them are elected.”

One of President Nasheed’s campaign promises was reducing the “top-heavy” government by reducing the number of political appointees, and according to Zuhair, there are fewer political appointees under this government than the previous one.

Minivan News reported in April last year there had been 440 political appointees under former president Maumoon Abdul Gayoom’s government, and at the time, there were 538 political appointees under President Nasheed’s government.

Zuhair told Minivan News today that when the civil service was created in 2007, the former government transferred many of its appointees to posts in the civil service “so in case they lost the election, they still have many people with them.”

He added the former government was “not counting right” and their numbers “weren’t technically correct,” as they had everyone, including muezzins, working for them as political appointees.

In mid-March 2010, Independent MP Mohamed Nasheed requested a list of political appointees and their salaries from the Ministry of Finance, to clarify exactly how many appointees were working under the government.

Another of President Nasheed’s promises was to reduce the civil service and thus reduce government expenditure. The health sector is one of the first industries to go through this transition.

Member of the CSC, Mohamed Fahmy Hassan, said there have been many posts which have been abolished from the CSC and transferred to independent institutions, such as TV Maldives and and newly formed Maldives Health Services Corporation.

“The number of civil servants will be less now,” Fahmy said, “but the question is, how do you define public service?”

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Work permit deposits for expats to be made to Finance Ministry

Deposits made by foreign nationals wishing to work in the Maldives must now be paid to the Ministry of Finance and not the Department of Immigration and Emigration.

Controller of Immigration Ilyas Hussain Ibrahim, said there was no act regarding deposits before, and they were simply kept by the Ministry of Human Resources.

He noted the transfer to the Finance Ministry was “to make administration easier.”

The deposits are required by the government from all foreign nationals applying for a work permit in the Maldives and must be secured before entering the country, an issue that has caused consternation among employers seeking to employ foreign workers.

Chief at the work visa section of the immigration department, Hassan Khaleel, said the amounts were decided by taking into consideration expenses in case the worker needs to be repatriated.

These expenses include the cost of air-fair back to the worker’s home country, accommodation for a few days in custody, food and transport, and medication if needed.

Minister of Human Resources Youth and Sports, Hassan Lateef, said the transfer of the deposits to the Finance Ministry had been a “cabinet decision,” but noted nothing else has changed in the laws and regulations concerning the deposits.

He said the employer must pay the deposit to the ministry and can also claim it back once the worker has gone back to his or her respective country.

Lateef said the money will be used “in case the employer, or the government, wants to send the employee back to their country, or if he or she is admitted into hospital.”

He said the money would not gain any interest and if it is not collected or used, it will “sit in the Finance Ministry” and be “kept safely.”

Indian nationals pay the least, with deposits of Rf 3,500 (US$272). Sri Lankans must pay Rf 4,000 (US$311) and Bangladeshis Rf 8,000 (US$623). The highest deposit required is for Ecuadorian nationals who must pay Rf 49,000 (US$3,813).

A full list of the deposits for each country can be downloaded here.

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Attorney General appeals to High Court over civil servants’ salaries

The Attorney General sent an appeal to the High Court last Thursday on behalf of the Ministry of Finance, regarding last week’s decision in favour of the Civil Service Commission (CSC) concerning civil servant salaries.

Last Tuesday the Civil Court ruled in favour of the CSC in their suit against the Ministry of Finance regarding civil servants’ salaries, which were reduced in October last year. Although the court ruled in favour of the CSC, they did not specify whether the ministry had to restore civil servant salaries.

Speaking to Minivan News last week, member of the CSC Mohamed Fahmy Hassan said he was “confident the Finance ministry will give the salaries as we requested,” after which members of the CSC and the ministry met last Thursday to discuss the issue.

Today Fahmy said they were “very surprised” when they received instruction from the High Court “not to take any action [regarding the salaries] until they have made a decision.”

He said last week, the Finance Ministry “were very positive and we did not think they had any intention to appeal.”

Fahmy said the issue of salary restoration will again be put on hold until the High Court makes its decision. “I don’t know how long this is going to take,” he said. “It depends on whether any party appeals to the Supreme Court.”

He noted the CSC was not planning on appealing the case yet, but it was a possibility which would be looked at depending on how the AG’s appeal process was going.

“This is a very clear case,” Fahmy said, “civil servants cannot be singled out. There are many other staff paid by the government.”

Fahmy noted the CSC would continue with this case “until it is resolved or a decision is made by the highest authority.”

He added the continued reduction of civil servants’ salaries was “against the Constitution.”

Attorney General Husnu Suood said his office was “speaking against points of law involved in the judgement.” Basically, “we are not happy with the interpretation [of the law]” made by the Civil Court last week, he said.

“The interpretation of the law is not correct,” he stated.

Suood said his office along with the Ministry of Finance and the CSC were having “discussions as to how we should proceed with judgement passed by the Civil Court.”

He said although it was “too early to say” whether civil servants would have their salaries restored soon, he was “very hopeful that it will be settled outside of court.”

Suood reiterated the point that they wanted to settle the matter outside of the court system, and this appeal was only meant to speak against the Civil Court’s ruling.

Press Secretary for the President’s Office Mohamed Zuhair said “in this kind of scenario when they can’t agree,” the appeal is meant to give the Ministry of Finance more time to resolve the issue with the CSC out of court.

He noted Parliament still has not yet passed any of the bills which would provide the government enough revenue to surpass the needed Rf7 billion to restore civil servants’ salaries.

“We will not reach it this year,” Zuhair said, “no bills have been discussed in the house.”

He added the CSC “has no right to demand higher pay” when the government’s revenue is still not beyond the stipulated Rf7 billion.

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Civil Court rules in favour of CSC regarding salary cuts

The Civil Court has ruled in favour of the Civil Service Commission (CSC) yesterday on their case against the Ministry of Finance regarding civil servants’ salary cuts, but did not rule on whether the salaries have to be restored.

Civil servants’ salaries were officially reduced in October 2009 with salary cuts of up to 20 percent. This measure was taken when the government’s budget deficit forced several independent commissions and government offices to reduce salaries in order to alleviate expenditure.

The government had promised to restore salaries once the budget rose above Rf7 billion (US$544 million). The cut was expected to last only three months.

In December 2009 the CSC requested the government restore salaries as the proposed mid-term 2010 budget was anticipated to exceed Rf7 billion. But disputes over whether the budget included foreign aid or not complicated the issue further, as the Finance Ministry said, excluding foreign aid the budget was Rf6.8 billion.

After months of incertitude and awaiting a decision, the court ruled “the Finance Ministry does not have the legal authority to order amendments to salaries”, according to Press Secretary for the President’s Office, Mohamed Zuhair.

Zuhair said President Mohamed Nasheed had not yet said anything on the ruling, or whether the government would appeal the decision, but noted it was a possibility an appeal would be made on the ruling.

Member of the CSC Mohamed Fahmy Hassan said the court’s decision showed “the independence of the judiciary and non-interference [of the government] in affairs of the judiciary.”

He said the CSC is hopeful “the issue will be solved” and they are “confident the Finance Ministry will give the salaries as we requested.”

Fahmy said they hoped their salaries will be restored soon, and added they will be “flexible” when negotiating the back-log of payments. He estimates the total amount of money ‘owed’ to civil servants since the pay cuts started in October 2009 is approximately Rf120 million.

“We have always had the national interest as our concern,” he said, “and we will try to come to an amicable solution.”

He noted “preliminary discussions [with the ministry] went very positively,” and said “final decisions will be announced soon.”

Fahmy said the CSC took the court’s decision as an order for civil servant salaries to be restored. “We don’t see any other interpretation.”

He added “the government is very keen to resolve this issue to the satisfaction of everybody involved,” and noted the issue would probably be solved once President Mohamed Nasheed returns to the country after his visit to Bhutan.

Deputy Minister of Finance Ahmed Assad said his reading of the court’s ruling is that “it’s the CSC’s decision” on whether they want to have their salaries restored.

“Regarding the judgement, there are no negotiations,” he said, adding the ministry is “still talking” to the CSC about the issue.

“We’ve said this before,” Assad said, “it’s not because we want to [cut their pay] but because we don’t have a choice.”

He said as far as the economy is concerned, “we don’t see any economic event that has changed [the situation].”

Assad said “we want to give it some time” and they are now waiting for the CSC to make their decision.

History

After salaries were initially reduced in October 2009, the CSC and Finance Ministry have been disputing the legality and rationality of the pay cuts. The Maldives is still among the countries with the largest civil service as a percentage of its population. In 2008, civil service salaries amounted to 34 percent of total government expenditure.

Spokesperson for the Civil Servants’ Association, Abdulla Mohamed, told Minivan News in December last year, “we believe this damage was done to civil servants as a punishment and if there really were special economic circumstances, members of parliament and independent institutions too should have taken a pay cut.”

Pay cuts for independent institutions came into effect in December and several MPs volunteered for a pay cut.

On 30 December, the CSC issued an announcement stating civil servants’ salaries and allowances had been restored, as the 2010 budget was expected to exceed Rf7 billion.

But by mid-January 2010, the issue was still unresolved and salaries had not been restored.

At the time, the Ministry of Finance stated “employees will receive the salary that was reduced due to the economic circumstances,” and disputed the CSC’s statement claiming they had not discussed it with the ministry before publicising the announcement.

In January, the Ministry of Finance asked Parliament and the Maldives Monetary Authority (MMA) to arbitrate the dispute between them and the CSC.

Fahmy told Minivan News at the time that they would put the country’s interests above the interests of civil servants, but added, “it is difficult to justify that to 29,000 civil servants if the government is spending on all the other items in the budget.”

Shortly after Parliament and the MMA were asked to intervene, the CSC warned to take legal action against the ministry. The ministry threatened to also take legal action against the CSC.

By the end of January, the government announced salaries of staff at independent commissions, courts, parliament and the judicial services had been restored, and civil servant salaries would follow in April.

On 3 February 2010, the CSC announced they would take the issue to court and “claim for the amount reduced from the salaries of civil servants.”

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Climate change trust fund money not delayed, says surprised EU

The European Union has claimed that funds allocated to the Maldives by the EU for climate change adaptation earlier this month have not been delayed, following reports in newspaper Miadhu Daily.

Miadhu reported that the Vice President, Dr Mohamed Waheed, requested the €6.5 million from the EU directly without going through the proper channels of communication, slowing the process.

A Memorandum of Understanding (MoU) was signed on 6 April between the Maldivian government, the EU and the World Bank. The money will be allocated to fund climate change adaptation and mitigation programmes, which are to be proposed by the government and managed by the World Bank.

Vice President Waheed said the allegations are “part of a smear campaign. It’s come after I spoke out the other day. So it has no basis whatsoever.”

Dr Waheed said the time schedule for the utilisation of the funds, which states that all projects must be submitted by 15 January 2011, shows “we are perfectly on schedule.”

He said he doesn’t “really understand where this is coming from, but I believe it’s a political stunt, played by someone in this country to basically discredit me. You can ask the EU representative in Sri Lanka.”

The Delegation of the EU to Sri Lanka and the Maldives stated today that “the delegation is pleased to confirm that the EU has contributed EUR 6.5 million (approximately US$8.8 million) to the multi-donor Maldives Climate Change Trust Fund.”

They noted arrangements for the programme include a Climate Change Advisory Council, of which Vice President Waheed is the chair, which will “provide strategic direction to the climate change activities under the Trust Fund ensuring that activities are aligned with the government’s Strategic Action Plan and climate change priorities.”

There will also be a Technical Committee composed of technical experts of the government, private sector and leading civil society organisations. This second committee will be responsible for “reviewing and recommending technically well-sound project proposals for financing and monitoring the overall progress of the programme.”

Programme Manager for the trust fund at the EU’s High Commission to the Maldives and Sri Lanka in Colombo, Harshini Halangote, told Minivan News “we have already committed this money” and assured the trust fund has been made available to the government.

“The government is solely responsible for proposing to the World Bank on the government’s priorities,” she said, noting the money is “solely for climate change purposes.”

She said the government’s proposals will then be looked into by the World Bank and the EU for approval.

Halangote added the Vice President would “not request for it personally,” noting there is a governance structure which has been passed and looked at by the government which outlines the proper channels of communication.

“Minister of Finance Ali Hashim, who signed the MoU, is aware they do have the money,” she said.

Halangote added “the project can run as fast as they want it to,” and said there was no truth in the allegations that the funds had been delayed.

Delhi-based Environmental Specialist for the trust fund, Priti Kumar, said “there has been no delay. When the World Bank starts a long-term project like this, you can’t expect a trust fund to be allocated within 21 days [since the signing of the MoU].”

She said the EU and World Bank “want the money to be utilised in a very useful manner” which is not influenced by politics.

She noted the Climate Change Advisory Council “is working quite well” and projects are being developed already.

She added although “everything is on track,” it will take “a few months for everything to be streamlined” as the trust fund involves a large sum of money.

Deputy Minister for Environment, Dr Mohamed Shareef, said the money “is available” and the ministry has “proposed several projects.”

He said the money “had been delayed for a bit, but international bureaucracy also takes its time.”

Dr Shareef said the ministry hopes there will be some projects starting by the end of this year and said he had been told “there will be more funds available” in addition to the original €6.5 million.

Deputy Minister of Finance, Ahmed Assad, said he is “not aware of any [delays]” and has not been “informed of any issues” regarding the trust fund.

Deputy Minister of Foreign Affairs, Ahmed Naseem, told Minivan News yesterday that the funds had been “delayed for too long,” but today said he no longer wished to give details on the matter.

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