Government income has to be doubled to create fiscal space for increased capital expenditure and investment for development opportunities, President Mohamed Nasheed said in his radio address yesterday.
Speaking on the cabinet decision last week to incentivise voluntary redundancy in the civil service, President Nasheed reiterated that facilitating more attractive and higher paying employment opportunities for civil servants and government employees remains “a major goal for the government.”
“Development opportunities are going to be very limited if a large part of state revenue is recurrent expenditure,” he said. “We have to increase capital expenditure. The best way is to exponentially increase government income.”
While revenue was increasing year by year, Nasheed continued, current levels of annual income have to be “doubled” to make fiscal space for capital investments.
“It will take time for the state to reach that level,” he added. “It is necessary for the government to maintain recurrent expenditure at a certain level to reach [the goal]…The government’s purpose, or objective, is to find ways for employees to improve their standard of living.”
Under the scheme launched by cabinet on Tuesday, civil servants and government employees will be eligible for one of four retirement incentive packages: no assistance, a one time payment of Rf150,000 (US$11,700), a payment of Rf150,000 and priority in the small and medium enterprises loan scheme (for those 18-50 years of age), or a lump sum of Rf 200,000 (US$15,600) and priority in government training and scholarship programmes (for those 18-40 years of age).
Government employees above the age of 55 who retire voluntarily will be given the same benefits as those released by the Civil Service Commission (CSC) at the mandatory retirement age of 65.
The deadline to apply for the programme with the Finance Ministry is May 31, 2011.
In August 2009, the government’s decision to implement austerity measures to alleviate the crippling budget deficit – including unpopular pay cuts of up to 15 percent for civil servants – was met with protests and fierce resistance from opposition parties and the CSC.
President Nasheed announced at the time that the government planned to halve the 32,000-strong civil service by 2011 through redundancies and transfer of employees to corporations.
While the President stated that the civil service should be composed of no more than 18,000 well-paid and qualified staff, CSC Chair Mohamed Fahmy told Minivan News last week that the commission currently has 19,000 permanent staff.
At the height of a protracted legal dispute between the CSC and government last year, the parliament-appointed independent commission was accused of attempting to topple the government and “plunge the Maldives into chaos.”
International organisations such as the International Monetary Fund (IMF) and the World Bank meanwhile insist that reckless expansionary fiscal policies from 2004 onward that saw doubling expenditure on salaries between 2007-2009 crippled the economy.
“The Maldives faces the most challenging macroeconomic situation of all democratic transitions that have occurred since 1956,” read a World Bank report in March 2010.