The prices of staple foodstuffs will “go up dramatically” if amendments to the Public Finance Act are ratified, warns the State Trading Organisation (STO).
At the now daily President’s Office press conference yesterday, Undersecretary Ibrahim Rasheed revealed that the STO has informed President Mohamed Nasheed that prices would spike if the government ceased its subsidies.
“Until subsidies can be given again through new legislation, subsidies given by the government for foodstuffs will become illegal (if the amendments are ratified),” he said. “Therefore, if this amendment becomes law, a kilo of rice will be at Rf9.75, a kilo of flour Rf6.12, a kilo of sugar Rf8.01.”
In 2009, the government provided over Rf139 million in food subsidies to STO to control prices of staple foods.
According to STO, the price of a kilo of rice or flour will increase threefold while the price of a kilo of sugar will double.
Rasheed accused opposition MPs of attempting to block government services and aid in order to foster negative public perception and shift blame to the administration.
“Even for greed of power, this is too much,” he said.
The parliament’s amendment bill to the Public Finance Act, which was voted through in June, was cited by the cabinet as one of the main reasons for their resignation.
“Act of deception”
In a press release today, the main opposition Dhivehi Rayyithunge Party (DRP) denies that government subsidies will have to be discontinued.
Condemning the claim as “an act of deception”, the statement accuses the government of trying to “mislead the public,” undermine public confidence in MPs and “light fires of hatred.”
“The reality is that while President Nasheed’s government does not have the capability to provide the services required by citizens, this is a cheap propaganda activity to incite fear among the public by using the State Trading Organisation and other such institutions,” it reads.
According to the amendment proposed to article seven of the Public Finance Act, “any relief, benefit or subsidy by the state” must be given in accordance with laws passed by the People’s Majlis.
Legislation governing the issuance of subsidies and other state benefits has not yet been proposed to parliament.
The amendment to article 10(a) reads that financial benefits provided by the government in order to pursue its policies must also be issued in line with laws passed by parliament.
However, article 10(c) of the amendment bill states that the government could grant “some financial assistance” from the emergency funds allocated in the state budget under certain circumstances, such as to provide relief after natural disasters.
Meanwhile, 10(d) states that assistance could still be given “if the government believes providing financial assistance to a businessman or a business facing financial difficulties was in the public interest” or if the financial difficulty is believed to impact “the lives of a sufficiently large number of people in society”.
Moreover, article 34(c) stipulates that the government must implement recommendations of the parliamentary committee that reviews the state budget.
Addressing press after the resignation of the cabinet, President Nasheed announced that he would veto the amendments as it would make it “impossible for the government to function” and because “MPs themselves could see that it was proposed without the slightest consideration.”
Article 91(b) of the constitution states that any bill returned to parliament “shall be assented to by the President and published in the Government Gazette if the Bill, after reconsideration, is passed without any amendments, by a majority of the total membership of the People’s Majlis.”
“In my view, these things are happening because a few members of the People’s Majlis are working to preserve their self-interest,” Nasheed said. “If you look at the latest amendment to the public finance law you will see very clearly what’s written in those amendments. It is very clear that those amendments have provisions that directly involve Majlis members’ interest. So what I see here is that we can’t allow [people to] destroy the constitution of the Maldives and render it powerless while hiding behind the protection of the Majlis.”