The cabinet’s economic committee has announced President Abdulla Yameen will hand out the promised MVR5000 (US$ 324) to an estimated 17,000 pensioners starting in March.
Tourism Minister Ahmed Adeeb told the media during a press conference this afternoon: “I announce the happy news that the elderly will receive MVR5000 instead of MVR2000 at the end of this month.”
The government had allocated MVR470 million (US$ 30.5 million) in the state budget to give out an MVR2,300 (US$ 149) in cash handouts to individuals over the age of 65. These funds will now be invested in the retirement pension fund or in financial instruments such as T-bills to generate the monthly MVR5000 stipend, Adeeb said.
The government will need to generate an ambitious MVR1 billion (US$64.9 million) from investments this year to sustain the venture.
Although the government has not yet begun investments to generate the additional income for pensions, it will begin disbursing MVR5000 at the end of February as it is “certain” the required funds can be generated through future investments.
In the meantime, money will be redirected from within existing budgetary resources using “innovative methods” to pay out the pension this month, Minister of Fisheries and Agriculture Mohamed Shainee told Minivan News.
“This will not require additional expenditure from the budget. This will be done through investments made outside of the budget,” Adeeb told the press today.
“When we invest in the pension fund, this allowance will be given out without any breaks in the next five years. Even in the worst-case scenario, we will be able to generate that money. We can do this without any issues,” he said.
The cabinet’s economic committee is to meet tomorrow to discuss the most viable method of investment, Shainee told Minivan News.
Former President Mohamed Nasheed introduced the old age pension in 2008, while President Yameen pledged to increase the pension during last year’s presidential election campaign. On assuming office, Yameen said the government would not give cash handouts, but would provide the promised money through an insurance scheme.
The People’s Majlis subsequently passed a record MVR17.95 billion (US$ 1.6 billion) budget for 2014 with a deficit of MVR1.3 billion (US$84.3 million).
The deficit is expected to grow after the People’s Majlis failed to approve revenue-raising measures as proposed by the Ministry of Finance and Treasury.