Day: October 4, 2013

Week in review: September 27- October 4

This week began with the Elections Commission meeting to decide if it was to go ahead with the scheduled run-off on Saturday (September 28). After police demonstrated their intention to stop the vote by force, the EC declared that it could not hold polls under such circumstances.

The decision to delay, however, did not prevent the EC’s members receiving multiple death threats, prompting requests for police assistance.

Whilst EC advisor Judge Johann Kriegler held a public lecture regarding the importance of collective belief in a successful election, legal experts in the country explained to Minivan News that the Supreme Court’s rulings had left the country in a legal void.

The Maldivian Democratic Party (MDP) began what they hoped would be a pre-election rally from the south side of Male’, which turned into a stand-off with police in the streets surrounding the Supreme Court. Following news of the delay, Mohamed Nasheed’s supporters have demonstrated in the same area for seven consecutive nights.

After some reflection, the MDP’s leadership announced its determination to establish a “people’s government” should a new president not be sworn in by the end of incumbent Dr Mohamed Waheed’s term on November 11.

Waheed, after calling for national calm whilst the Supreme Court deliberates, hosted his former boss Nasheed at Muleeage – the pair’s first meeting since the February 2012 transfer of power.

The remainder of Waheed’s address to the nation was largely concerned with warning the state’s warring institutions about foreign actors who may take advantage of such disharmony. His fears were no doubt stoked by the remarks made on social media by former Foreign Minister Dr Ahmed Shaheed, who had suggested that resolution of the Maldives’ current crisis may require some form of foreign assistance.

Whilst Waheed stayed away from the UN General Assembly this week, Acting Foreign Minister Dr Mariyam Shakeela was in attendance, warning the group’s members against attempts to interfere in “the emergence of an indigenous democratic system of governance in the Maldives”. Shakeela’s comments came just days after the Commonwealth Ministerial Action Group (CMAG) expressed concern at recent developments during its biannual meeting.

Unrest within the security forces became apparent this week, as a number of leaked letters from current and former military personnel revealed concerns over the potential politicisation of the Maldives National Defence Force (MNDF). Authorities have responded with stricter internal regulations and a number of suspensions, as well as blasting media outlets for reporting the leaked letters.

The Maldives Media Council announced its intention to file a no-confidence motion in parliament against the country’s broadcast regulator, as well as accusing the EC of favouring certain outlets.

The Indian High Commission this week revealed its own lack of confidence in multiple Maldivian state institutions, whom it accused of being complicit in the mistreatment of hundreds of its workers.

The country’s political deadlock has threatened to spread to the economy as port workers flexed their collective muscles in order to send a message to the government regarding the delayed vote. Reports of strikes by air traffic controllers and ground handling staff at Ibrahim Nasir International Airport (INIA) were played down by management.

Customs workers also held strikes on Thursday – citing long term workplace grievances – and have given management one week to address their demands .

Calls for tourism workers striking last week failed to result in significant incident, though Minivan News was informed of the partisan political atmosphere in Irufushi which has resulted in numerous dismissals at the resort.

Travel advisories in a number of significant markets, including China and the UK, were updated this week to warn of growing instability.

The MDP’s supposed run-off opponents, the Progressive Party of Maldives (PPM) took advantage of the lack of activity in the Supreme Court to call for the removal from parliament of MDP MPs who had criticised the court’s recent rulings. The Home Ministry has announced it is investigating both Transparency Maldives and the Tourism Employees Association of Maldives (TEAM) for similar offences.

The PPM also called for the resumption of Nasheed’s stalled trial regarding the detention of Criminal Court Judge Abdulla Mohamed, and the quick resolution of the Dr Afrasheem Ali murder case. Police this week forwarded a further four names to the Prosecutor General for their alleged involvement of the late PPM MP’s killing.

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Government rules out supplementary budget to plug 2013 shortfall, commits to T-bill sales

Finance Minister Abdulla Jihad has said the government has overcome the need to issue a supplementary budget to plug a shortfall in state spending for the current year, relying instead on short-term treasury bills (T-bills) to carry over its debts.

The comments were made as the Ministry of Finance today confirmed it had been officially requested to present the proposed annual 2014 state budget to parliament on October 30, with work ongoing despite the challenges posed by the upcoming Eid holidays.

Jihad previously told Minivan News that despite anticipating parliament would need to approve a supplementary budget after state offices were found to have exhausted their recurrent expenditure for 2013 by April, the government was now instead relying on T-bills to balance outgoings.

The finance minister last month said that the Maldives was relying on 28 day T-bills to help “roll over” debt one month at a time after parliament had failed to approve a number of measures to try and increase state expenditure not included in the 2013 budget.

T-bills are sold by governments all over the world as a short-term debt obligation backed by sovereign states. In the Maldives, they have a maximum maturity of six months, in which time they must be repaid.

The present government’s reliance on T bills has been slammed by the opposition Maldivian Democratic Party (MDP), which has previously questioned why there had been an increased reliance on short-term financing considering total state revenue rose 16 percent over the 12 months up to July 2013.

Borrowing fears

The Finance Ministry claimed in August that it had managed to reduce state spending since 2012, despite the MMA raising fears that the current “beyond appropriate” levels of government expenditure was leading to a vicious cycle of borrowing.

Early last month, the government said it hoped to secure longer-term financing measures to cover the shortfall in annual revenue as the number of 28-day T-bills sold by the state almost doubled in July 2013 compared to the same period last year.

According to the Maldives Monetary Authority (MMA) monthly review for August 2013, sales of T-bills for July 2013 has risen by 95 percent year on year.

The MMA stated that there had been a 163 percent in 28 day T-bills by July 2013 compared to the same time last year, despite sales of T-bills with a maximum maturation period of three month and six months declining by 63 percent and 83 percent respectively.

Sales of T-bills were also up 35 percent for July 2013 over the previous month, according to the MMA’s figures.

Budget issues

Finance Minister Jihad told Minivan News earlier this year that the state’s increased reliance on T-bills between July 2012 and July 2013 reflected the difficulties faced by the government in trying to raise budgeted revenue during the period.

He added that with only “a few people” in the private sector now interested in purchasing the short-term debt obligation from the government, T-bills has been sold as part of wider investments made by the state through the country’s pension fund.

Parliament in April rejected government-sponsored legislation to raise the airport service charge to US$30, which was among a raft of measures proposed by the Finance Ministry in the estimated 2013 budget to raise MVR 1.8 billion (US$116 million) in new income.

Other proposed measures include hiking Tourism Goods and Services Tax (T-GST) to 15 percent from July 2013 onward, leasing 14 islands for resort development, introducing GST for telecom services as well as oil, and “selectively” reversing import duty reductions.

Opposition’s T-bill concerns

Mahmoud Razee, former Economic Development Minister under the previous government, claimed T-bills should only be used by the state to help cover its operational expenses, rather than serve as a long-term means of financing.

“With income tax revenue having increased according to the Maldives Inland Revenue Authority (MIRA), why have [T-bill sales] gone up? Under the MDP government we were using T-bills to meet our cash flow,” he said. “This had nothing to do with the fiscal deficit.”

Razee argued that while the former government had itself sought foreign loans to balance the financial deficit while in power, the administration of former President Mohamed Nasheed had worked to avoid relying on T-bills for longer-term financial concerns like balancing the national fiscal deficit.

“The moment T-bills are increased, this directly affects loans that banks are able to give to the private sector, leading to the cost of borrowing increasing,” he said.

Razee claimed that the MDP government had attempted to try and extend income tax reforms introduced during its time in office to further boost revenues – a plan he said was cut short by the controversial transfer of power on February 7, 2012.

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