Finance Ministry shuts down 2013 budget

The Ministry of Finance and Treasury has shut down all state expenditure except for salaries.

A circular sent to all government offices yesterday said the annual budget for 2013 has been “shut down” starting today.

“However, once all the expenses for staff salaries are arranged for, and if the budget allows for it, we will settle absolutely necessary expenses through the 2013 budget,” Minister of Finance and Treasury Abdulla Jihad said.

The parliament had passed a MVR 15.3 billion (US$ 992 million) state budget for 2013. According to the MMA, despite a higher than expected increase in income from taxation, the deficit for 2013 is expected to rise to MVR 1.7 billion (US$ 107 million) or 5 percent of GDP.

The government has faced serious cash flows during this year after the parliament failed to approve new revenue raising measures which comprise about 15 percent of projected income or MVR1.8 billion (US$116.7 million).

The revenue raising measures proposed in the 2013 budget included hiking Tourism Goods and Services Tax (T-GST) to 15 percent from July 2013 onward, raising airport service charge to US$30, leasing 14 islands for resort development, raising tariffs on oil, introducing GST for telecom services, and “selectively” reversing import duty reductions.

In April, parliament rejected government-sponsored legislation to raise the departure tax on outgoing passengers, prompting the government to seek parliamentary approval to divert MVR 650 million (US$42 million) allocated for infrastructure projects in the budget to cover recurrent expenditure.

The move followed a cabinet decision to delay implementation of new development projects financed out of the budget due to shortfalls in revenue.

According to the World Bank, the Finance Ministry turned to monetization, build up of arrears and short term T-bill sales to finance the budget deficit. These methods pose “macro risks,” the World Bank said.

On December 16, the Majlis passed a US$ 29 million loan from the Bank of Ceylon for budget support. The loan carries an interest rate of 8 percent and has a grace period of one year. The monthly repayment amount is $490,000.

Opposition MPs have criticized the government’s borrowing from commercial banks at high interest rates, but Jihad has said the Maldives has no choice.

At present, public debt stands at an “unsustainable” 81 percent of GDP, the World Bank has said, projecting debt to rise further to about 96 percent by 2015.

Meanwhile, the People’s Majlis has extended the deadline for MPs to submit amendments to the proposed budget for 2014 until 4 pm today.


3 thoughts on “Finance Ministry shuts down 2013 budget”

  1. Dr. Bagee Waheed spent all the money for paying forces to defend him self for the coup he brought with the tycoon Gasim Ibrahim.

    AAC says 1 billion lost from the budget Dr. Bagee Waheed and Gasim might have spend the money to tipp off the people to by there vote to get elected and escape justice.

    The night 6th Feb 2012 Dr. Bagee Waheed command to the police to sit go and sit down at Republican Square the will paid and the rest will be paid latter.

  2. Things are looking very bad for The Maldives, especially with this government in place who think they can give more than ever while there is less money. The best government now would be a realistic one, one that cuts the costs, invests in a long term financial healthy country. Not one handing out stuff to people now to get their votes and later on makes the same people suffer over this.

    There are many examples of the mess bad governments have created all over the world, I'm afraid The Maldives is headed the same way. And obviously it's not the wealthy and powerful people who will suffer, it's the people who already are struggling.

  3. This is what happens when a pack of idiots brainwashed by 'religious clerics' votes in a gangster who thinks he's an 'economist'.

    Maybe a bit of extended starvation will knock some sense into those idiotic fools who sold their country for 100Rf.


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