Day: December 6, 2010

Half of Rf12.37 billion state budget to be spent on employees

The Finance Ministry has unveiled a state budget of Rf12.37 billion (US$962.6 million) for 2011 with a target of reducing the deficit to 15.3 percent of GDP in the coming year, down from 26.25 percent in 2009.

The Fiscal and Economic Outlook 2009 to 2013 published alongside the budget on the Ministry’s website this week states that the main objective of the government’s fiscal policy is to bring expenditure in line with revenue and maintain the deficit within a sustainable range.

The Finance Ministry reveals that while capital investment amounts to 21 percent of the budget, 49 percent of expenditure in 2011 will be on salaries and allowances for government employees.

“If the cost of health insurance to employees is included, half of the state budget is spent on employees,” reads the budget summary.

Foreign loan assistance along with Rf1.4 million (US$108,949) in income from privatisation and Rf1.3 million (US$101,167) expected from the sale of treasury bills was proposed to plug the budget deficit.

In November, the International Monetary Fund (IMF) delayed its third disbursement under a US$92.5 million program pending the approval by parliament of significant austerity measures in the budget.

In its Country Report for the Maldives published in June, the IMF warned that as a result of the failure to enforce pay cuts and the injection of an additional US$62.2 million in spending by parliament, “the annual deficit targets for 2010 and 2011 will be missed on current policies.”

An internal World Bank report produced for the donor conference in May identified dramatic growth in the public sector wage bill as the source of the ballooning budget deficit.

A 66 percent increase to salaries and allowances for government employees between 2006 and 2008 was “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 deficit in 2010 is now expected to be at 16.4 percent of GDP, above forecasts of 14.8 percent in the 2010 budget.

While the economy grew by 4.8 percent in 2010 after a 2.3 percent contraction in 2009, nominal GDP, which accounts for a 5.5 percent inflation rate, grew by 12.2 percent this year.

Revenue and expenditure

Government income fell by 23 percent in 2009 in the wake of the global financial crisis, which saw tourist arrivals decline by 4 percent and revenue from import duties down by 25 percent over the previous year.

Offering resorts under development that were facing difficulties with financing an additional year to pay rent contributed to the decline in government income, resulting in a 36 percent decrease in revenue from resort rent in 2009.

While Rf6.8 billion (US$529 million) in revenue in 2010 was forecast at the end of last year, current estimates place the figure at Rf6 billion (US$467 million)  – an 11 percent  shortfall the Finance Ministry attributes to parliament’s failure to pass legislation on corporate profit taxation as well as delays in implementing a goods and services tax (GST).

Moreover, as only three out of 13 resorts expected to open in 2010 began operations this year, estimates of Rf1.7 billion (US$132 million) in revenue have been lowered to Rf1.1 billion (US$85 million).

However, income from state-owned enterprises is now expected to be higher than originally forecast at over Rf1 billion (US$77.8 million) by the end of the year.

Revenue in 2011 is projected to be Rf8.7 billion (US$677 million), a 44 percent increase from 2010 expected to be driven by the introduction on business profit taxes, GST and extension of resort leases.

Income from taxation is projected to account for 59 percent of government income in 2011, with Rf612.5 million expected from business profit taxes.

The Finance Ministry notes that delays in passing taxation legislation is “the biggest obstacle” to continued assistance from international agencies.

Main industries

The seven-year trend of decline in fisheries is expected to continue in 2011, with the industry expected to have contracted by 5.8 percent by the end of 2010.

After a 29 percent decrease in the construction industry in 2009, the industry is expected to have registered growth of 2.6 percent in 2010.

With nine new resorts under development next year, the industry is projected to grow by 9.7 percent in 2011.

A strong rebound by the tourism industry – which accounts for 27 percent of GDP – saw revenue in 2010 14 percent higher than projected in 2009.

While tourist arrivals increased by 13 percent in the first nine months of 2010 compared to the same period last year, arrivals are expected to have increased 20 percent by the end of the year.

Moreover, a 70 percent decline in occupancy in 2009 was followed by a 74 percent increase in 2010 – with 131,107 more visitors than 2009 recorded in 2010.

Nominal GDP per capita in 2010 is calculated to be at US$4,628 and is projected to climb to US$5,114 in 2011.

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Civil Court asks JSC for documentary proof it is carrying out constitutional responsibilities

The Civil Court has given the Judicial Service Commission (JSC) a week to locate ‘missing’ evidence it claims will exonerate it from accusations of bias and unconstitutional conduct.

JSC, the independent body constitutionally mandated to maintain ethical and disciplinary standards of the judiciary, is facing charges of professional negligence arising from its decision not to investigate complaints of serious misconduct made against two judges by Treasure Island Limited in 2009.

Treasure Island alleges that JSC decisions to dismiss his complaints against former Supreme Court Justice Mujthaz Fahmy and Judge Ali Naseer were taken arbitrarily and in breach of the Constitution. At the time Treasure Island made the complaints to the JSC, Justice Fahmy was the Commission’s deputy chair.

The JSC has denied any wrongdoing and, since the case began in early October last, has maintained that proper procedure was followed in responding to the complaints.

JSC regulations, and the Constitution, require that any decision or action it takes regarding a complaint against the judiciary must have the majority support of its ten members. The regulations also require that records be kept of the members present and how they voted when the decision was taken.

On Sunday Judge Mariyam Nihayath acceded to Treasure Island’s repeated requests for the court to demand that JSC provide documentary evidence to support its claims of having observed proper procedure.

JSC legal representative, Abdul Faththah, admitted in court yesterday that despite his many valiant efforts he had been unable to locate any such evidence – “yet”.

The court also noted that JSC had responded to one of the complaints by Treasure Island saying it was beyond the Commission’s duties to review the ruling of a judge. The letter sent, in August 2009, was signed by then Chair of JSC, High Court Chief Justice Ghani.

Faththah admitted in court yesterday that there was no evidence to prove the letter was based on a majority decision taken by Commission members as is required.

He told Judge Nihayath, however, that he had consulted with Ghani on the matter, and had been advised that circumstances do exist in which the JSC Chair has the legitimate authority to deal with a complaint without a majority vote by members.

Proof of when and how the JSC chair can exercise the said discretionary power, however, have not been located “yet”, Faththah said.

Judge Nihayath told Faththah the court could not wait indefinitely for the proof to turn up, and ruled that JSC provide the court with the documents when the case resumes on 14 December 2010.

She will also decide then, she said, whether to agree to Treasure Island’s request to summon as witnesses some current and former members of the JSC to verify their involvement – or lack thereof – in a majority decision not to investigate the company’ complaints.

The JSC has been increasingly riven with conflict. Some members have accused current Chair Supreme Court Justice Adam Mohamed Abdulla – in association with several others – to have deliberately and systematically avoided adopting a Standard Operating Procedure according to which it should be run.

Tensions escalated further last week when one of its members, Aishath Velezinee, accused Justice Abdulla of being mentally unfit to hold office. She has also accused certain members of the JSC of abusing their powers and using the JSC to sabotage all efforts to consolidate the new Maldivian democracy.

The JSC was required to have adopted a Standard Operating Procedure by 26 January last, but has so far failed to do so. By October this year there were over a 100 complaints against the judiciary the JSC had not attended to.

It also failed to meet the deadline for appointing an interview panel to approve judges to the High Court bench, almost two months after the deadline for applications elapsed.

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Aircraft collision not a major incident, says Civil Aviation Department

A collision that occurred yesterday between a Maldivian Air Taxi seaplane and another aircraft at Male’ International Airport resulted in no injuries or major damage, the country’s Civil Aviation Department has said, claiming it has no concerns over the safety of the aircraft.

Hussein Jaleel, Deputy Director General for the Civil Aviation Department that oversees airline regulation, said it had been made aware of a collision yesterday, which it downplayed as a minor accident involving the wingtip of an aircraft colliding with another aircraft that was not seen as “a major safety concern.”

“There was a collision yesterday involving a Maldivian Air Taxi aircraft, but it was actually not a serious incident,” Jaleel said. “No person was injured and no damage was recorded to the aircraft that could affect flight operations.”

Local newspaper Haveeru reported that the seaplane collided with the wing of an aircraft taking-off from Hulhule, at 6:30am while it was approaching the water runway.

The official, however, said the number of passengers and the cause of the accident could not be identified yet, as a full report has not been filed so far.

“We receive urgent reports only if it is a serious accident. So it will take some time to receive reports of minor accidents,” the official said.

MAT Ground Operations Manager, Inthikaab Ahmed said he was not aware of any accidents.

A spokesperson for airline operator Maldivian Air Taxi told Minivan News that there had not been any reports of an accident or minor collision in the company’s fleet, a track record they claimed has not changed for some time.

When asked about the Civil Aviation Department claims, the company spokesperson said its management had not been informed of any incidents with its vehicles and it had no idea where the information had came from.

“We [Maldivian Air Taxi] have had no accidents in the last few years, maybe even longer,” said the spokesperson. “There have not been any collisions.”

Regardless of whether the accident reported was a serious or a minor collision, Jaleel said Civil Aviation Department regulations required an investigation into any accident. However he added that “no further reports would be required” in relation to yesterday’s incident.

“We have no issues that the accident was the result of negligence, though if we ever have any serious concerns relating to safety issues then we would of course take action,” he added.

The Civil Aviation Department claimed it therefore remained confident of the effectiveness of safety measures employed by seaplane operators in the Maldives.

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Private groups sought for local heritage promotion

Private parties are being sought by the government to aid in the conservation and promotion of historical sites across the country, according to news reports.

Haveeru has reported that a total of 68 sites, including Utheemu Palace and the Ihavandhoo Hirigalu Mosque in Haa Alif Atoll, the Matheerashu coffin, the National Museum and a host of historical mosques, will all be included in the plan.

The country’s Heritage Department, which is linked to the Ministry of Tourism, Arts and Culture, said that the decision was made due to growing demand and interest among the public.

December 15 has been set as a deadline for private groups wishing to express an interest to the Heritage Department in supporting the programme, the paper added.

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Vice President meets overseas cadets

Cadets and officers from Bangladesh, India, Singapore and Sri Lanka, who are currently visiting the Maldives under the Youth Exchange Programme, met with Vice President Dr Mohamed Waheed Hassan yesterday under a programme to trade knowledge and experience between cultures.

The Vice President said the visit would give the young cadets them “a different perspective on climate change”, and an awareness of how immediate the threat of climate change was for some countries such as the Maldives.

The Cadet Youth Exchange Programme aims to visit and participate in cadet corps activities in the exchange countries, and create among participants the awareness, understanding and appreciation of other cultures and society.

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Education workshops mull Maldives university “masterplan”

The development of a higher education “masterplan” for the Maldives that could eventually establish a network of university and training facilities were the key focus of consultation workshops held in the country this week.

The workshops, which were held yesterday at Male’s Traders Hotel and earlier in the week – December 2 – at Gan, Addu Atoll, were held to consult with a number of stakeholders in the field of higher education for a study on expanding training opportunities in the country, Miadhu reported.

Speaking yesterday from the Traders Hotel, Education Minister Dr Mustafa Lutfi said the workshops form part of a study that is being jointly conducted with World Bank support to try and provide higher education for everyone in the Maldives, an ambition he claimed that was vital for developing the nation.

Maldivian Vice President, Dr Mohamed Waheed Hassan, who was also in attendance at the event, was reported to have spoke on the vital need for a university in the country; something seen by the government as a “work in progress” at present.

According to Miadhu, Dr Waheed stressed there was a serious need to look at the Maldives’ capability to support multiple state-run universities that were technically capable of meeting international standards.

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Higher education will shape the future of Maldivian democracy: Vice President

The future of democracy in the Maldives is tied to the country’s embrace of higher education, according to Vice President Dr Mohamed Waheed Hassan.

Speaking at the Consultation Workshop on Future Higher Education in the Maldives, Dr Waheed said he doubted the Maldives could develop a thriving democracy “without a free and high quality education system”.

A higher education system would set what was built and developed at lower levels, he explained, and therefore it was vital to improve the “very weak liberal arts education foundation that we have today.”

“We need to broaden our understanding and our conception of needs of higher education in our country than merely filling vacant jobs,” Dr Waheed said.

The Consultation Workshop on Future Higher Education that was held yesterday was organised by the Department of Higher Education, with the assistance of the World Bank.

The main objective of the workshop was to consult with a wide audience of stakeholders in higher education, which would lead to the preparation of a master plan in higher education in the Maldives.

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