Author: Zaheena Rasheed

Parliamentarians must bolster elections commissions: India’s Speaker

Speaker of India’s Lok Sabha Meira Kumar has called on SAARC parliaments to support the work of their election commissions, stating that it is the vote that enables the poorest and weakest to decide the destiny of their nations.

“It is crucial that the voters are able to elect their representatives freely, without any fear or favour. Hence the institution of Election Commission must be bolstered,” she said.

Speaking at the 7th conference of the Association of SAARC Speakers and Parliamentarians (ASSP) held at Bandos Island Resort yesterday, Kumar said she took pride in the Indian Election Commission’s sterling reputation.

Discussing the theme ‘Strengthening democracy through institution building’, Kumar shared India’s democratic experience, highlighting especially the role of an impartial judiciary.

Parliamentarians must strive to guarantee access to judicial remedies for each and everyone, she said.

Anti-corruption legislation and right to information bills are crucial in ensuring transparency and certainty of executive action, she continued.

“In India, the Right to Information Act has augmented the accountability of public authorities by putting their functioning into the public domain. The issue of corruption in governance is being widely discussed across the entire SAARC region and we have to find ways to eradicate it,” she said.

“The Lok Pal and Lokayuktas Bill 2013 which has recently been passed by the Indian Parliament is a step forward in our fight to eliminate corrupt practices.”

She also identified inclusive political parties, local governments and media as key institutions that require parliamentary support.

Political parties need to sponsor more women in public life, she said, noting that although South Asian women constitute 23 percent of the world’s population they are not adequately represented in the political arena. Mechanisms such as reservations for women must be set in place to ensure their equal participation, she said.

Decentralisation is the key to strengthening democracy as it “stimulates public participation,” she stressed. The devolution of power in India through the 73rd and 74th constitutional amendments brought three million elected representatives, including about 1.2 million women to the center stage.

Further, parliaments represent the sovereign will of the people, and as such they must not only legislate, but also mold opinions to trigger social transformations, she said.

“We must understand that Parliaments can frame any number of progressive legislations but unless the people believe in the necessity of these laws, they will remain confined to the rule books,” she said.

Describing democracy as a journey, Kumar said India is still evolving and devising new ways to meet emerging challenges. Parliamentarians can take the lead in reinforcing democracy through institutional development, she reiterated.

The three day conference on SAARC parliament’s roles in institutional building and inclusive development ended today.

The ASSP was established in 1992, with the aim of exchanging ideas and information on parliamentary procedures and information among parliaments, and to strengthen South Asia as a stable and independent region.

Maldives Speaker Abdulla Shahid said the organization had decided to amend its charter to include a women’s committee of parliamentarians as a charter body as well as form a forum for young parliamentarians (age 18- 40).

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Maldives hosts 7th SAARC Speakers and Parliamentarians Conference

The Maldives is hosting the 7th Conference of the Association of SAARC Speakers and Parliamentarians (ASSP) at Bandos Island Resort and Spa.

President Abdulla Yameen inaugurated the three-day conference yesterday evening, and reiterated the Maldives’ commitment to furthering regional cooperation.

Calling on SAARC to be more relevant and responsive, Yameen said: “To keep abreast with the expectations of our peoples, we need to increase the relevance of SAARC, both as a tool for multilateral cooperation among our Member States, as well as in global politics and in international trade.”

Speakers from Bhutan, India, Nepal, Pakistan and Sri Lanka and the secretary of Afghanistan’s parliament are in the Maldives for the conference.

Parliamentary delegations of Bangladesh and Nepal were unable to attend as Nepal had only held new parliamentary elections in November while Bangladesh’s parliament has been dissolved with new general elections set for January.

According to the people’s Majlis, the themes -“Strengthening democracy through institution building” and “Democracy and Inclusive Development – achieving SAARC  MDGs” – will be discussed at the conference.

The ASSP was established in 1992, with the aim of exchanging ideas and information on parliamentary procedures and information among parliaments and to strengthen South Asia as a stable and independent region.

The association’s work stagnated in the late 90’s due to political turmoil in the region, and was revived recently on the initiative of India’s Lok Sabha Speaker Meira Kumar, the People’s Majlis secretariat have said.

Welcoming the delegations, Maldives Speaker Abdulla Shahid noted all South Asian countries are now led by civilian governments.

Shahid noted the current parliament in the Maldives is the first fully elected parliament, but MPs have faced and overcome “almost every conceivable constitutional challenge.”

Further, the rights guaranteed to the parliament had constantly been tested by the executive and legislative branches of government.

Meanwhile, Kumar stressed the importance of parliaments and parliamentarians as democracy advances in the region and said SAARC parliaments can learn a great deal from each other’s parliamentary experiences.

Pakistan’s National Assembly Speaker Sardar Ayaz Sadiq said South Asia consists of one-fourth of the world’s population, but continues to be the largest concentration of impoverished people.

South Asia is currently at a crossroads, of breaking with its past and possibly becoming the second largest economic powerhouse after China and East Asia, Sadiq said.

Meanwhile, female parliamentarians and the secretaries general of SAARC parliaments met on Saturday morning to discuss the opportunities and challenges for women’s political participation in South Asia and the methods to ensure a cost effective secretariat respectively.

The Women’s Committee has pledged affirmative action to increase women’s political participation whilst the secretaries generals proposed amending the charter of ASSP to constitute a Young Parliamentarians forum.

The Association’s General Assembly is to take place at Bandos Island Resort and Spa today and tomorrow (December 22 and 23).

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Committee recommends increasing 2014 budget to MVR18 billion

The People’s Majlis Budget Committee has recommended raising the proposed 2014 state budget from MVR17.5 billion (US$ 1.1 billion) to MVR18 billion (US$1.2 billion) despite concerns over prospective revenue raising measures.

The latest recommendations will have to pass on the Majlis floor, with the final report being sent to People’s Majlis Speaker Abdulla Shahid on December 21.

President Abdulla Yameen proposed a record MVR17.5 billion budget shortly after assuming power. The budget has a projected deficit of 2.2 percent, with over MVR3 billion (US$ 224 million) is to set to come from new revenue raising measures that require amendments to legislation.

These measures include hiking Tourism Goods and Services Tax (T-GST) from 8 to 12 percent, revising import duties, a continuation of the tourism bed tax, raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, introducing GST for telecommunication services, and charging resort operators in advance for resort lease extensions.

The Ministry of Finance had proposed similar revenue raising measures the 2013 budget but was ultimately unable to obtain the expected revenue after the parliament rejected several measures – including increasing airport departure fees.

The MVR600 million (US$39 million) expansion is mainly to fund tourism promotion, Public Sector Investment Programmes (PSIP), and an increase to the budgets for the state’s independent institutions.

The Governor of the Maldives Monetary Authority (MMA) Fazeel Najeeb has expressed concern that the central bank may have to print money if expected revenue is not realised.

Najeeb told the People’s Majlis Budget Committee on Saturday (December 14) the government must not proceed with new development projects unless and until the new revenue is assured.

“If not, ultimately the government will come to the MMA to find the cash to proceed with those projects. And then again we have more rufiyaa in the economy to chase after the few dollars,” Najeeb said.

Several independent institutions including the Employment Tribunal, Judicial Services Commission (JSC), Department of Judicial Administration, Election Commission, Human Rights Commission, Anti- Corruption Commission, and the Prosecutor General had complained about the proposed budget cuts last week.

According to the Maldives Inland Revenue Authority (MIRA), the institution had asked for MVR73 million (US$4.7 million), but the Finance Ministry had reduced the figure to MVR 45 million (US$ 29 million).

Speaking at the Budget Committee meeting last week, the Commissioner General of Taxation Yazeed Mohamed said financial constraints had affected MIRA’s ability to collect taxes.

MIRA had set its own goal to collect MVR10 billion (US$648 million) in taxes this year, but would only able to collect approximately MVR 8.4 billion (US$ 545 million), Yazeed said.

While the Ministry of Finance estimates MVR10 billion (US$648 million) can be raised in taxes for 2014, MIRA believes it can collect over MVR11 billion (US$ 713 million) if the institution is granted adequate financial resources, Yazeed added.

Budget reductions will also affect MIRA’s ability to train employees, he said.

Meanwhile, the Elections Commission said the allocated MVR57 million (US$3.7 million) is not enough for the commission to hold the constitutionally mandated local council and parliamentary elections. The commission noted it still had over MVR29 million (US$1.9 million) in unpaid bills from the repeatedly re-scheduled presidential elections.

Only the Civil Service Commission expressed satisfaction with its allocated budget. The commission had asked for MVR28 million (US$ 1.8 million), before the Finance Ministry reduced the amount to MVR25.7 million (US$1.7 million).

Meanwhile, the World Bank has said that measures used by the government to finance the deficit – such as monetisation, the accumulation of unpaid bills, and the rise of short term debt through the sale of T-bills – posed “macro-risks” to the economy.

President Yameen has expressed concern over “extremely high” state expenditure and pledged to make cuts, though he has as yet only managed to make modest cuts such as halving the presidential salary and marginally reducing the salaries of state and deputy ministers.

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Malé City Council ordered to suspend projects

The Finance Committee of the People’s Majlis has ordered Malé City Council to suspend all projects except for basic service delivery, pending an investigation into the council’s conduct in leasing land.

“The Finance Committee has received reports the Malé City Council is acting in the interest of certain individuals in renting out land and awarding contracts for development of land,” the Finance Committee said in a statement today.

The decision passed with the unanimous support of the five members present and voting.

Meanwhile, the Anti- Corruption Commission (ACC) announced today that it has recommended charges be filed against two of the nine Malé City councilors and three council staff for conferring undue advantage in the awarding of a contract in the Vilimalé Safe Beach Project.

The two councilors are Deputy Mayor Ahmed Samah Rasheed and Ibrahim Sujau. The staff are Assistant Directors Mizhath Naeem, Aishath Jumana Mohamed Rasheed, and Abdulla Rameez.

The Vilimalé Safe Beach Project had sought a contractor to keep the Vilimalé beach area, jetty, and lagoon clean and promised to provide adequate workspace.

The winning bidder had asked for two beachfront blocks to build administrative offices and establish a business at the site in order to sustain the project.

However, the ACC said it does not believe the Malé City Council’s promise of workspace allows for land to be granted to carry out for-profit activities.

The commission notes that all bidders except the winning bidder believed the workspace simply meant land on which to store equipment.

The bid evaluation committee justified their decision by arguing that the winning bidder had proposed a much lower price. However, the commission said that if other bidders had known the promised workspace could be rented out or used for profit, then it is possible that they may have proposed lower prices as well.

Hence, “other bidders did not receive opportunity to compete fairly,” the ACC said.

The ACC recommends the Prosecutor General pursue criminal charges for conferring undue advantage under Article 12 (a) in the Prevention and Prohibition of Corruption Act of 2000.

A study conducted by advocacy NGO Transparency Maldives has found 83 percent of people surveyed felt corruption had increased or stayed the same during the past two years in the Maldives.

According to the survey, the most common area in which bribes were paid was said to be land services, with the most frequent reason for giving bribes being ‘to speed things up’.

Earlier in December the ACC alleged corruption in the award of apartments to individuals as part of the Veshifahi Malé housing programme, ordering the invalidation of 139 of the 448 successful applications.

Elections for the Malé City Council are to be held on January 18.

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Majlis passes landmark Anti-Torture Act, Prisons and Parole Act

The People’s Majlis voted unanimously today to pass the landmark Anti-Torture Act, and the Prisons and Parole Act.

The Anti-Torture Act declares freedom from torture as a fundamental right, penalises torture, ensures respect for human rights of criminal suspects, and prohibits torture in state custody, detention in undisclosed locations, and solitary confinement.

The act further declares any statement obtained through torture to be invalid in a court of law.

Speaking to Minivan News, MP Eva Abdulla said she had proposed the Anti-Torture bill to “ensure we do not carry forward the legacy of torture” inherited from Maldives’ authoritarian past.

The Prisons and Parole Act specifies rules for the management of jails and procedures for incarceration, rehabilitation and parole as well as rights and benefits due to inmates. It also provides for the establishment of an independent Maldives Correction Service to oversee jails.

The Anti-Torture Act passed with the unanimous support of the 53 MPs present and the Prisons and Parole Act passed with the unanimous support of the 54 MPs present at the time of voting.

The UN Human Rights Committee in July 2012 said incidents of torture in the Maldives “appear systematic and systemic” and expressed “grave concern” over the low number of cases that have undergone investigation.

Freedom from torture

Eva said the bill had been formulated based on international human rights conventions the Maldives had signed on to, including the Convention to Eliminate All Forms of Discrimination Against Women (CEDAW), Convention on Rights of the Child (CRC), Convention Against Torture (CAT) and the Optional Protocol to the Convention Against Torture (OPCAT).

The act defines torture as any action committed by a state official, or committed with the orders, consent or knowledge of a state official to cause physical or psychological pain to obtain information or a confession or to inflict punishment or to threaten or humiliate an individual.

The act guarantees freedom from torture as a fundamental right of every individual even in circumstances of war or imminent war.

Physical torture includes but is not limited to beatings, kicking, applying heated rods, inflicting electric shock, restricting daily meals, and forceful feeding of rotting food, another individual’s excrement or substances unfit for human consumption.

Pouring heated oil or acid on a person, waterboarding, rape, forceful removal of teeth or nails and subjecting a person to drops of water at a consistent rate are also noted as methods of torture.

Acts of psychological torture includes – but is not limited to – blindfolding, threatening to harm family members, solitary confinement, long and continuous interrogation, public humiliation, physical abuse of family members in front of detainee, stripping, shaving hair, and branding skin.

Officials who torture people to death or cause insanity, memory loss or infertility will be imprisoned for 25 years.

The act further penalises those who use rape as a method of torture, or cause insanity and loss of memory with a prison sentence between 15 and 20 years.

Imprisonment between 10 and 15 years is set for causing loss of speech, hearing, sight, sense of taste and damage to the backbone.

In prosecution, a person who orders, helps, or assists in committing an act of torture will be treated the same as the individual directly responsible for the act of torture.

The act also affords victims compensation and mandates rehabilitation for perpetrators, torture victims and their families

The act mandates the state declare all detention centers in the Maldives, and submit monthly reports of detainees and inmates at detention centers specifying reasons for detention.

Parole

The Prisons and Parole Act proposed by Maldivian Democratic Party (MDP) Rugiyya Ahmed was vetoed three times by former President Dr Mohamed Waheed.

According to MDP MP ‘Reeko’ Moosa Manik the bill was drafted after “thorough research” including visits to jails in Sri Lanka, Australia, and Singapore.

The act mandates the state allow inmates to pray, exercise, food, do laundry, meet family and provide reading and writing materials.

According to the act, subsidiary regulations must be compiled to ensure good food and basic medical services are provided. Jail buildings must have adequate light and ventilation and amenities.

Men, women, and children must be incarcerated separately and the state must ensure proper documentation of all inmates.

The act establishes complaint mechanisms, but also penalises offenses carried out by inmates during their incarceration.

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President Waheed receives grand welcome on return to Malé

President Abdulla Yameen has received former President Dr Mohamed Waheed Hassan upon his return to Malé last night amidst great fanfare.

Waheed and his wife Ilham Hussein were greeted at the Ibrahim Nasir International Airport by Vice President Dr Mohamed Jameel Ahmed and several ministers including Defense Minister Mohamed Nazim and Tourism Minister Ahmed Adheeb.

Speaking to the press on his arrival, Waheed said he now wished to work “for the benefit of the community.”

Yameen , Jumhooree Party (JP) leader Gasim Ibrahim, MPs, senior government officials and dozens of supporters welcomed Dr Waheed on his return to the capital. Speaking to the media, Yameen pledged “the highest honors and respect” to his predecessor.

When asked if Waheed will be given a government position, Yameen declined to comment, stating “this is a matter between us”.

An official motorcade escorted Waheed and Ilham to their residence.

Waheed had departed the Maldives on a private visit on November 14, days after declaring he would remain in power beyond the end of the presidential term on November 11. In a televised speech, Waheed pledged to resign on the day of the presidential run-off, scheduled for November 16.

The Ministry of Finance and Treasury approved MVR 525,000 (US$34,047) for Waheed’s month long trip.

He had contested in the annulled first round held on September 7,winning just 5.13 percent of the vote. Waheed subsequently decided to back Yameen in the following rounds.

Speaking to local media before his departure, Waheed said his return depended on the political environment in the Maldives. When Yameen won the presidential election on November 16, Waheed quickly announced that he would be returning to the Maldives.

Waheed assumed the presidency after the controversial resignation of his predecessor, Mohamed Nasheed, on February 7, 2012. Nasheed has accused his deputy Waheed of engineering a coup d’état to unseat the Maldives’ first democratically elected government.

Yameen’s Progressive Party of the Maldives (PPM) played a key role in supporting and maintaining Waheed’s rule amidst two years of political turmoil.

The PPM will seek to amend the Former Presidents’ Privileges Act in order to ensure Waheed receives privileges and immunities, Yameen said. At present, the act states that a president must hold power for 30 months in order to qualify for privileges. Waheed had held the post for 21 months.

In his farewell address on November 15, Waheed defended his track record, claiming he had maintained peace and stability despite assuming the presidency at a time of “anger, unrest and economic ruin.”

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Audit of Waste Management Company uncovers embezzlement, “wasteful” expenditure

An audit of the government owned Waste Management Company has uncovered severe mismanagement and embezzlement.

Former President Mohamed Nasheed had established the company by presidential decree on 15 December 2008 with assets worth MVR 1.5 billion (US$ 97 million).

However, “Since its inception, the company has done nothing to achieve its aims,” Auditor General Niyaz Ibrahim has said in a new report.

The company’s sole expenditure in the period 2009- 2011 was on wages, the report notes, adding “state expenditure on the Waste Management Corporation Ltd did not bring any benefit and was completely wasteful.”

With the election of island and atoll councils, the Finance Ministry had recommended the company be dissolved in 2011 as the Local Government Act charged local government with waste management. However, the President’s Office advised against the dissolution, the report said.

In 2010, a European Union and World Bank funded “South Ari-Atoll Regional Waste Management” Project to establish a waste management systems in Alif Dhaal Atoll Bodukaashihuraa was transferred from the Ministry of Housing and Environment to the Waste Management Company on President Nasheed’s orders.

But to this day, the Waste Management Company has not done any work on the project, the report found.

Further, an unnamed board member had embezzled MVR610,000 (US$ 39,354) by doctoring cheques, the report said. The board member was the sole employee in charge of the company’s finances.

The Auditor General’s Office was unable to carry out a full financial audit because the company had failed to submit its annual financial report, the report said.

Moreover, the company had failed to keep proper documentation of its expenditure and revenue or minutes of its board meetings or an asset register.

Expenditure on travel abroad was not documented, while employees were not registered with the pensions scheme as mandated by the Pensions Act, the report said.

Niyaz has recommended criminal charges be filed against all parties who participated in, were accomplice to,and/or were negligent in the embezzlement and wastage of state funds.

He has further called on the government to decide on the company’s future as soon as possible.

Governance NGO Transparency Maldives released a report last week revealed that 83 percent of people surveyed felt corruption had increased or stayed the same during the past two years.

Speaking at the event to launch the Global Corruption Barometer (GCB) report, President of the Anti-Corruption Commission Hussain Luthfy urged more transparency within government companies in order to foster an atmosphere in which corruption can be addressed proactively.

He suggested that government owned companies often pass resolutions to obstruct the ACC’s investigations.

Transparency Maldives, the local chapter of Transparency International (TI) describes the GCB as one of the tools it uses to better understand corruption.

The group’s most widely used indicator – the Corruption Perceptions Index  – was released last week. For the second consecutive year the Maldives was not ranked after TI was unable to gather the necessary data.

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MMA chief slates government’s revenue raising measures

The Governor of the Maldives Monetary Authority (MMA) Fazeel Najeeb has criticised the proposed 2014 state budget for containing tenuous revenue-raising measures, expressing concern that the MMA may have to print money should the government fail to realise expected revenue.

The Ministry of Finance and Treasury has proposed a record MVR 17.5 billion (US$ 1.1 billion) budget for 2014 with a projected deficit of 2.2 percent of GDP. The government expects MVR8.5 billion (US$ 552 million) from taxation and a further MVR3.5 billion (US$ 224 million) from new revenue raising measures.

These measures include hiking Tourism Goods and Services Tax (T-GST) from 8 to 12 percent, revising import duties, a continuation of the tourism bed tax, raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, introducing GST for telecommunication services and charging resort operators in advance for resort lease extensions.

The Majlis must amend existing legislation to realize the additional MVR 3.5 billion.

Najeeb told the People’s Majlis Budget Committee last night the government must not proceed with new development projects unless and until the revenue is realized.

“If not, ultimately the government will come to the MMA to find the cash to proceed with those projects. And then again we have more rufiyaa in the economy to chase after the few dollars,” Najeeb said.

Najeeb noted the proposed measures relied heavily on taxing the tourism sector and said adding new taxes to a nascent tax system introduced in 2010 may create problems. He further said that making resort owners pay lease extension fees upfront was robbing the state of future revenue for a “temporary benefit.”

The government had also proposed revising import duties and increasing departure charges to finance the 2013 budget, Najeeb said. However, the Majlis had failed to approve them, resulting in the MMA having to print the money, he added.

According to MMA figures, the central bank has printed over MVR1.7 billion (US$ 109,677,419) this year alone. Najeeb claimed the MMA had been forced to print the money so that the government could pay overdue bills.

The World Bank has criticized the measure in a new report and said monetisation poses “macro-risks” including the devaluation of the rufiyaa.

The report also notes that the government is increasingly relying on short-term commercial borrowing in the form of selling treasury bills (T-bills) to the banking, private sector, and high net worth individuals at steep interest rates.

Speaking on the matter, Najeeb said the Maldives was accumulating debt “without stop” due to short term T-bill sales. He suggested capping T-bill sales and obtaining Majlis approval to sell T-bills beyond the capped amount.

According to the MMA’s figures, the government has accumulated MVR8.5 billion in T-bill debt at the end of November.

Najeeb said the short-term debt had become a “burden” on the state and suggested negotiations with creditors to change short-term debt to long-term debt. Noting that the economic growth is not keeping pace with state expenditure, Najeeb stressed the need for economic diversification and reduction of the government size.

President Abdulla Yameen had pledged to reduce state expenditure on assuming office but has so far only made modest cuts limited to halving the presidential salary and reducing salaries of state and deputy ministers.

Foreign reserves are critically low at US$341.8 million, or approximately 2.5 months of imports, while public debt stands at 81 percent of GDP, the World Bank has said. Debt is projected to rise further to about 96 percent by 2015.

“This debt path is unsustainable and suggests there is little room for additional borrowing,” the World Bank has warned.

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Government reneges on cash handouts for pensions, offers insurance scheme instead

The government will provide the previously pledged old-age pension of MVR5000 per month (US$325) through an insurance scheme rather than in cash handouts, Finance Minister Abdulla Jihad has told the People’s Majlis Budget Committee.

However, individuals over 65 will continue to receive the current monthly pension of MVR2300 ($149) next year, a Finance Ministry official told Minivan News.

In addition to raising the pension from MVR2300 to MVR5000, President Abdulla Yameen had made last minute promises including “unlimited” health care under the state’s health insurance scheme Aasandha, designating a general practitioner to each family, creating 94,000 new jobs, providing MVR10,000 (US$650) for fishermen regardless of fish yield, and MVR8000 (US$518) for farmers.

Speaking at a Budget Committee meeting, Jihad said: “I do not think the current budget includes elderly benefits. The president has decided to do that through an insurance mechanism.”

In November, Fisheries Minister Dr Mohamed Shainee said the government will not be handing out cash to fishermen, but would introduce an insurance scheme whereby fishermen will be asked to pay a monthly premium of MVR500 (US$ 32) during the fishing season to gain MVR10,000 (US$ 650) during the off-season.

“There is a lot of support for the policy from fishermen. This will incentivise the fishermen. They catch more than MVR10,000 on good fishing days. But if the weather is bad or if the catch is low, there is a degree of despair. We are providing an incentive to overcome this despair to get ready for the next fishing season,” Shainee told local media.

The government will need to start a roster of fishermen, and divert funds from the MVR100 million (US$6.5 million) fuel subsidy to set up the insurance scheme, he added.

The insurance scheme offers come amidst a looming financial crisis. The World Bank has warned the country’s economy is at risk due excessive state expenditure. Further, the government is pursuing untenable financing measures that pose “macro-risks” including possible devaluation of the rufiyaa, the World Bank said.

At present, public debt stands at an “unsustainable” 81 percent of GDP, but is projected to reach 96 percent by 2015, the World Bank said.

Despite promising to curb state expenditure on assuming office, Yameen has only made modest cuts such as halving the presidential salary and reducing the salaries of state and deputy ministers.

Further, the government on Tuesday proposed a record MVR 17.5 billion (US$ 1.1 billion) budget with a projected deficit of 2.2 percent. Over 70 percent of the budget accounts for recurrent expenditure.

Of the MVR 17.5 billion, only MVR 500 million (US$ 32 million) will be spent on new development projects while MVR 400 million (US$ 26 million) will be spent on fulfilling Yameen’s presidential pledges, Jihad told the budget committee.

The government plans to plug the deficit by borrowing from commercial banks. The government has proposed obtaining a US$25 million from the State Bank of India to finance the projected deficit of MVR886,622,881 (US$ 57,201,476).

The parliament’s Finance Committee last week recommended the Majlis approve a US$29.4 million loan from the Bank of Ceylon for budget support for the current year.

The loan which carries a grace period of one year is to be paid back in monthly installments of US$ 490,000 at an interest rate of 8 percent.

Quoting the saying “beggars cannot be choosers,” Jihad said the Maldives has no choice but to borrow from commercial banks at high interest rates.

“We could go to Bank of New York, but they will not lend to us. The best bet now is Bank of Ceylon,” he said.

“The risk factor is high in the Maldives so some parties are increasing the interest rates. So if we have political stability in the Maldives, it is possible [the interest rate] may decrease. It will not happen all of a sudden but it will get better when that risk decreases in the future,” he added.

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