Day: July 20, 2011

Expenditure on 244 political appointees in the executive branch is two percent of the state’s wage bill or Rf99 million (US$6.4 million) a year, according to official figures released by the Ministry of Finance and Treasury.

The Rf1.6 billion (US$103 million) of annual spending on 20,476 civil servants meanwhile accounts for 39 percent of total state expenditure on salaries and allowances, followed by 24 percent for uniformed bodies (5,949 police and army officers), 17 percent for local councils (1,091 elected councillors), 10 percent for independent institutions (1,904 employees) and five percent for the judiciary (1,461 employees).

Annual expenditure on parliament (211 employees) accounts for two percent while administrative staff at the President’s Office (186 employees) represent one percent of the total wage bill.

A press statement issued by the ministry today notes that the figures were made public because “misleading statements” were being made about government spending.

“The economy has been adversely affected as a result of the state budget deficit in past years,” it reads. “One thing to be noted is the significant increase of recurrent expenditure compared to revenue. Recurrent expenditure is 12 percent above the government income forecast for 2011. Moreover, 49 percent of the state’s recurrent expenditure is spent on salaries and allowances for state employees.”

“Tip of the iceberg”

Speaking to Minivan News today, MP Dr Abdulla Mausoom of the opposition Dhivehi Rayyithunge Party (DRP) said that expenditure on political appointees in the executive was “just the tip of the iceberg.”

“The whole country was corporatised,” he explained. “There’s a roads corporation and all sorts of corporations. The people appointed to the boards of these corporations are all purely political appointees. They were appointed directly by the President to promote a political agenda.”

He added that the corporations were created “to give political posts to [ruling Maldivian Democratic Party] MDP activists.”

Moreover, said Mausoom, the corporations have “taken millions of dollars in loans to give salaries to these MDP activists.”

“Some of these people are not qualified at all,” he claimed. “There are people who have been made Managing Directors who cannot even read an MoU [Memorandum of Understanding] written in English.”

Dr Mausoom argued that the majority of senior officials in the corporations were filling “useless posts.”

The Public Accounts Committee (PAC) of parliament had requested information about expenditure on corporations, he continued, but the figures had not been provided.

“Most of them don’t even show up at the office,” he said. “Every day between sunrise and sunset, a new post is created in these corporations.”

“Distortions”

Finance Minister Ahmed Inaz however dismissed Dr Mausoom’s contention as “an attempt to distort” the information made public today.

Inaz insisted that senior officials of corporatised entities were not paid salaries or allowances out of the government’s wage bill.

The Finance Minister explained that state-owned enterprises such as the State Trading Organisation (STO) were managed as businesses and paid their employees from income raised through their operations.

“Other corporations such as Dhiraagu pay dividends to the government,” he said.

While subsidies were granted to the State Electricity Company (STELCO), Inaz said that the government’s policy was to switch to targeted subsidies for the poor.

“What would happen if we suddenly brought a speeding motorcycle to a halt?” he asked, referring to public companies. “It will slide off the road and crash.”

On the cost of political appointees, the Finance Minister argued that two percent of the wage bill was “a negligible amount.”

“Say for example that we eliminated all political posts and only President Nasheed is left in the executive,” he said. “Reducing or eliminating two or three percent would not have a significant impact on state expenditure.”

Austerity battles

In August 2009, the government’s decision to introduce a raft of austerity measures – including unpopular pay cuts of up to 15 percent for civil servants to reign in the ballooning budget deficit – was met with fierce resistance from opposition parties.

The pay cuts sparked a protracted legal dispute between the Finance Ministry and the Civil Service Commission (CSC), which won a court case against the ministry in April 2010 to restore salaries to previous levels.

Meanwhile an internal World Bank report produced for the donor conference in May 2010 noted that increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, which was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

“Even before government revenues fell and when government revenues were at an all time high in 2008, the ratio of the wage bill to revenues at 46.5 percent was also at an all-time high (46.5 percent compared to an average of 38.1 percent between 2000 and 2007). When revenues plummeted in 2009, the share of the wage bill to revenues rose an astronomical 89 percent,” the report explains.

In April this year, the government launched a programme to incentive voluntary redundancy in the civil service.

Finance Minister Inaz told Minivan News in May that the programme “has to this date enrolled 800 people and already some of them have already been paid and moved out of the civil service. We hope over the next few weeks we will achieve our target of 1300.”

Inaz observed at the time that slimming down the civil service would not be easy: “The country’s employment has been totally dependent on the government. It is a very big change, and we have said we want the government to be a policy maker, a regulator, but not doing business, so jobs are created in the private sector.”

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