The government will provide the previously pledged old-age pension of MVR5000 per month (US$325) through an insurance scheme rather than in cash handouts, Finance Minister Abdulla Jihad has told the People’s Majlis Budget Committee.
However, individuals over 65 will continue to receive the current monthly pension of MVR2300 ($149) next year, a Finance Ministry official told Minivan News.
In addition to raising the pension from MVR2300 to MVR5000, President Abdulla Yameen had made last minute promises including “unlimited” health care under the state’s health insurance scheme Aasandha, designating a general practitioner to each family, creating 94,000 new jobs, providing MVR10,000 (US$650) for fishermen regardless of fish yield, and MVR8000 (US$518) for farmers.
Speaking at a Budget Committee meeting, Jihad said: “I do not think the current budget includes elderly benefits. The president has decided to do that through an insurance mechanism.”
In November, Fisheries Minister Dr Mohamed Shainee said the government will not be handing out cash to fishermen, but would introduce an insurance scheme whereby fishermen will be asked to pay a monthly premium of MVR500 (US$ 32) during the fishing season to gain MVR10,000 (US$ 650) during the off-season.
“There is a lot of support for the policy from fishermen. This will incentivise the fishermen. They catch more than MVR10,000 on good fishing days. But if the weather is bad or if the catch is low, there is a degree of despair. We are providing an incentive to overcome this despair to get ready for the next fishing season,” Shainee told local media.
The government will need to start a roster of fishermen, and divert funds from the MVR100 million (US$6.5 million) fuel subsidy to set up the insurance scheme, he added.
The insurance scheme offers come amidst a looming financial crisis. The World Bank has warned the country’s economy is at risk due excessive state expenditure. Further, the government is pursuing untenable financing measures that pose “macro-risks” including possible devaluation of the rufiyaa, the World Bank said.
At present, public debt stands at an “unsustainable” 81 percent of GDP, but is projected to reach 96 percent by 2015, the World Bank said.
Despite promising to curb state expenditure on assuming office, Yameen has only made modest cuts such as halving the presidential salary and reducing the salaries of state and deputy ministers.
Further, the government on Tuesday proposed a record MVR 17.5 billion (US$ 1.1 billion) budget with a projected deficit of 2.2 percent. Over 70 percent of the budget accounts for recurrent expenditure.
Of the MVR 17.5 billion, only MVR 500 million (US$ 32 million) will be spent on new development projects while MVR 400 million (US$ 26 million) will be spent on fulfilling Yameen’s presidential pledges, Jihad told the budget committee.
The government plans to plug the deficit by borrowing from commercial banks. The government has proposed obtaining a US$25 million from the State Bank of India to finance the projected deficit of MVR886,622,881 (US$ 57,201,476).
The parliament’s Finance Committee last week recommended the Majlis approve a US$29.4 million loan from the Bank of Ceylon for budget support for the current year.
The loan which carries a grace period of one year is to be paid back in monthly installments of US$ 490,000 at an interest rate of 8 percent.
Quoting the saying “beggars cannot be choosers,” Jihad said the Maldives has no choice but to borrow from commercial banks at high interest rates.
“We could go to Bank of New York, but they will not lend to us. The best bet now is Bank of Ceylon,” he said.
“The risk factor is high in the Maldives so some parties are increasing the interest rates. So if we have political stability in the Maldives, it is possible [the interest rate] may decrease. It will not happen all of a sudden but it will get better when that risk decreases in the future,” he added.
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"oh and by the way, hulhule bridge is just a boat, not a bridge. sorry! blah blah for rihakuru and joospetty vote yameen"
Hah, Bank of New York, yeah? Get real. Bank of Zimbabwe might be a better place to go and beg for some cash. Throwing out GMR, holding rallies in the name of religion and nation, and threats of leaving the Commonwealth etc are not exactly measures that will reduce the risk are they? Eat fish, pray Allah will save us.
Yaameenu rayyithunnah olhuvaalaigen verikamah aee. Dhogu Dhogu Dhogu
Government needs to announce a credible and a concrete initiative if it wants to put a stop to the fast declining credibility.
@confusion
The gov lost its credibility a long time ago.
This proves we Maldivians need a few hundred more years to become an intelligent species.
Yameen got 60,00, odd votes, Yameen was elected with his supporter plus 45,000 thousand fish heads who think the world is created by something called Allah for Muslims. These 45,000 zombies are so ignorant that they think the world is created with such complexities like evolution, Chemistry and biology that regulates the functioning of living organism is simply for these imbeciles to behave like some salves of Middle Age. These halfwit asses believe the rest of the world is crazy for not behaving and living their schizophrenic way of life. Now let these nincompoops enjoy their filthy life at the expenses of the rest of normal human being in Maldives. Those blockheads had crucial leverage to turnout the result of the votes and let the rest suffer and live the savage’s life they used to live for whole their life. Do the crazy fish heads think Yameen, or Anni or anyone else can provide them Ipad, Iphones, rihaakuru, Killey, garudhiya , Lavza , tark bike, apartments, airports and branded wears and holiday packages with medical insurance while you do the duty of salves of some imaginary thing that even don’t exist . You fool jerks, with those wrongly wired brains; there is no way you can satisfy your craving without changing your crazy minds.
Is there more to come...
This article is inconsistent.
It begins by criticizing the President for creating a contributive scheme to insure fishermen and old age pensioners for extra benefits. While of course the size of such a scheme and the potential for growth is debatable, it is a move away from non-contributive welfare which would threaten the public treasury.
The beginning of the article implies that this publication is pro-welfare or rather would attack the President if he reneges on promised welfare benefits. Yet after implying so, then the article suddenly changes tack and cites a World Bank report which actually condemns unsustainable welfare schemes. So in fact, the World Bank's recommendations actually call on the political leadership not to set up non-contributive schemes. That is what the President is trying to do (effectiveness debatable).
So why does the article hold the President to task for trying (pretending or whatever you want to believe) to do what the World Bank report recommends?
Manifestos usually don't go into detail in the Maldives because mainly it is a marketing document. Regrettably manifestos usually include programs and projects that are not thoroughly studied or feasibility-tested. Tweaking them and refining them after assuming power is good.
Just to let the minister know - Banks in advanced economies are run very professionally. Even the US govt. would need to show their worth to get a loan. Maldives govt. should truly stick with Bank of Ceylon while they are offering loans. Never know even they may change their mind.
What does really the economics ministry do? It seems they have ministries because they hear these words and simply create something. Where is regulating body that can at least do something to bring some relief to the current situation? I think you have to cancel the import license from Resorts. These baggers do everything and control the whole economy of Maldives. Baggers import everything by themselves and local traders are left with nothing to share with Tourismo Dollars. There are million dollars of import these stingy ass holes do every day and if the local traders are allowed to import at least even 05% of this money will be benefited in the Maldivian economy. Tourism is the only industry which the local traders can enjoy some benefits, but there is no regulation to facilitate such benefits to locals. The Tourist Resorts behave like some autonomous emperors. If direct import of resorts stopped, the trend of import will dramatically change. People will stop importing unnecessary cheap products mainly targeted to local market and have very nasty competitiveness where traders sell their goods mostly either without profit and do so many unethical things that hampers the economy and leads tax fraud. Guys have some ball and act, the Tourism will not be affected with this, it will be much better then squeezing them with taxes and demanding advance rent of the Resorts. The import money that Resorts send direct to foreign traders will start coming in to Maldivian bank and the Maldivian traders will be more professional and will create credit line with foreign manufacturers and this will boost the foreign currency reserve in Maldives
@tsk tsk is Shooting the messenger
There is no excuse to cover the lack of an economic vision for Maldives. Spending cuts will not boost economy simply because the saving is little. The real issue is inefficiency due to the lack of vision or leadership
After what I can see is it many years before Maldives has a placed in the yearly prosperity index. It’s not even named whereof India and Sir-Lanka have a honourable 106th and 60th place
Look at
http://www.prosperity.com/#!/?opts=map
@tsk tsk: What's inconsistent is the PPM's pledges and how they're speaking now that they won the election.
Then again, I'm too busy laughing at the greedy idiots who sold Maldives off for a handful of cash to even care.
Risk factor is high because GOM do not honor binding contracs and the Judiciary is corrupt. GOM borrowing from local banks for budget support is bad news for the economy as this limits liquidity in the market for private sector borrowing.