IMF pursues government and parliament cost cutting with Maldives mission

The Maldives government has claimed it remains committed to working with the International Monetary Fund (IMF) in addressing its concerns on cutting state expenditure, following protests claimed to have been instigated as part of a “youth movement” concerned over rising living costs.

Press Secretary for the President Mohamed Zuhair told Minivan News that the IMF had travelled to the Maldives this week to meet with various organisations and individuals, including President Mohamed Nasheed and the Majlis’ Public Finance Committee as part of a mission to oversee a national economic recovery plan.

“They were visiting as part of a wider mission in the country including meeting with the president where they retread concerns over plans to reduce state expenditure,” he said.

The government’s fiscal policy has become a major national issue after a week of consecutive protests held earlier this month across Male’, which organisers claimed had been instigated initially by young Maldivians and supported by opposition politicians.

Protesters are said to have been particularly concerned with the government’s controversial decision to last month devalue its currency, allowing the rufiya to be traded within 20 percent of the pegged rate of Rf12.85 to the dollar – a move welcomed by the IMF.

Amidst the backdrop of perceived public and political dissatisfaction with government finances, Zuhair said that the IMF’s meeting with the Public Finance Committee had aimed to encourage parliament to consider government initiatives to try and increase direct state revenues to balance budget deficits.

“There are several bills on taxation currently under consideration in parliament and an amendment to the Tourism Goods and Services Tax (GST) – implemented in January this year on all services and goods purchased by tourists – from 3.5 percent to five percent,” he said. “I think it is interesting to note that there are many resort owners in parliament.”

While supporting initiatives to reduce costs that have led to ongoing public protests in the country, the Treasurer of The Maldives National Chamber of Commerce and Industry (MNCCI), Ahmed Adheeb Abdul Gafoor, said that the the planned addition of a minimum wage and a Goods and Services Tax (GST) on all businesses operating in the country needed to be gradually implemented.

Speaking earlier this month, Abdul Gafoor claimed that gradual introduction would be vital to ensure the nation’s fledgling economy can cope with any potential changes.

Alongside a parallel aim to try and create new job opportunities for young people, Zuhair claimed that the government had in general been closely following the recommendations of the IMF in trying to cut the state’s wage bill for political appointees and civil servants.

To this end, he said that the government had moved to try and reduce the wages of political appointees by 20 percent and civil servants by 15 percent.

“In enacting these cuts we were hoping that the Majlis would follow and also cut wages. The institution failed to do this as well as the judiciary,” he claimed. “The government as a result had to move to reinstate the wages it had cut.”

Zuhair claimed that the government had been working in line with IMF recommendations and had even tried to perform additional cuts unrequested by the finance body in areas such as reducing appointee wage spending.

Despite pushing ahead with its attempted financial reforms, the government has said that it has opted to meet with some of the youth figures said to be at the heart of organising protests seen in Male’ this month.

However, the session held yesterday was reportedly cut short when Finance Minister Ahmed Inaz walked out at the meeting claiming that the youth delegation included the leader of the opposition-allied People’s Alliance (PA) sports wing, and two others he claimed were “new political figures” created by senior party officials.

“I waited in the meeting until we could address the real issues, but they kept on criticising the government policy and some of the government projects,’’ Inaz told Minivan News. ‘’I did not want to have a heated political debate – we went there to negotiate with the youth regarding the dollar issues, not for a political debate.’’

Mohamed Ahsan, a spokesperson from the youth delegation, said the group was unable to clarify information it wanted from the Finance Ministry as the minister had left the meeting, though senior representatives of the Maldives Monetary Authority remained.

“The MMA officials were very cooperative,” he said. “We found out that the government have not been implementing the MMA’s suggestions to its full extent,’’ said Ahsan. “The MMA clarified almost all the information we required.”

He also said the finance minister “took it politically” because a PA member was present at the meeting.

‘’We have decided to recommence the protests, but due to exams we have temporarily delayed it,’’ he said. ‘’Once the examinations are over we will restart the protests.’’

A first round of negotiations held last week were described as “very upsetting” by the opposition’s Gayoom faction after the delegation accused President’s Office representative Shauna Aminath of stating that the “political solution” to the country’s economic woes was the arrest for the former President.

“We met with four people who claimed to represent youth,” Shauna said. “They presented a piece of paper they said was a youth proposal, but there was almost no discussion of what was on it.
“They talked a little about youth unemployment, and the rising price of milk, cooking oil and petrol. They said that young people did not have enough money to pay for coffees or petrol for their motorbikes.”

The group of four had “repeated the same messages being aired by [opposition] political parties: that the government had sold the airport to GMR, Dhiraggu to [Cable and Wireless], and that six people had control of the entire economy.

“Then they said they understood that the government’s [managed float of the rufiya] was necessary, but were concerned the government had not spoken about it beforehand.”

Back in March, MP for the People’s Alliance (PA) party and a member of the Majlis’ Public Finance Committee said that he believed current government policy was ultimately stifling economic development, claiming administrative costs within the civil service remained a notable problem.

“We have small percentage [of funds] to invest in the economy. We cannot move finances to a higher level though as the government doesn’t have the right policies to do this,” he claimed. “For instance, we need to reduce the number of [inhabited] islands by linking them and cutting the overall number of cost centres required for decentralisation.

The comments were made as the IMF claimed that the Maldives economy remained “unsustainable” even after cuts made to the annual 2011 budget, as it concluded its Article IV consultation earlier during the year.


14 thoughts on “IMF pursues government and parliament cost cutting with Maldives mission”

  1. The IMF boss is currently in custody in America for sexually abusing a girl in a New York hotal.. yuck

  2. What is not clear from Zuhair is whether the government has reinstated the wages of the political appointees. They were reduced by 20%, but have they been reinstated and if so, when?

    Why can't the government be transparent about these things? Why do people need to chase government officials to get these figures? In the modern world, it doesn't take much effort to have these figures publicly available on government websites!

  3. Ziyan, I know, how can we trust IMF now? They may start raping our wimmin if we keep them here any longer....time to bring down this dictatorship who has brought IMF here, aye?

  4. @Ziyad
    where do you get your news from? Haveeru? trying to spread false stories.

  5. @peasant
    hey moron. maldives is a member of the imf. it's not this dictatorship that's bringing them. they can come here whenever they want. you fool.

  6. The failure to understand sarcasm aside, the IMF is not the issue here.

    The ruling party has no wish to sacrifice its popularity by reducing government expenditure at such a crucial time in the run-up to the presidential elections.

    The majlis on the other hand will not reduce handouts to their affiliates either.

    This standoff might continue at the expense of the Maldivian economy as well as the average Maldivian citizen.

    The IMF wants its money back and is only worried about securing foreign interests in this country. Therefore any measures that might be beneficial to them - they will support. We cannot say that is evil as they have no obligation to ensure the wellbeing of our people or the development of our country.

    IF the current political situation does not allow for effective and decisive measures to prevent further inflation and contraction of the economy - then I - as someone who knows a few things here and there - advise my fellow countrymen to prepare for economic hardship.

  7. There is something clearly amiss with the headline of this article. There are clear signs of the government trying to cut costs. However, there is absolutely no regard whatsoever from the Parliament with regard to cost cutting.

    In fact, Parliament has been doing the exact opposite. They have been raising salaries and expenses for themselves and for institutions under their control!

    It's like we have two nations within one country, with two distinct budgets. However, only one side is responsible for finding the money, whereas the other is quite happy to find ways to spend it. When will this implode? Sooner rather than later, of course.

    The government is still turning a deaf year to those who are screaming about the pay of "political appointees". Everytime heated about the economy seems to end up on that argument. For God's sake, would our clever little Finance Minister put up his spreadsheet on the web for everyone to see?

  8. My dear friends!!! Don't look at the Head of IMF, how he looks like or how he rapes but look at what IMF experts advise the State....You may perhaps come across with a famous and very good Cardiologist but also a homosexual....Would you chase him out of the Theater when he is saving one's life using his ability in the field of Heart transplant or angioplasty???

  9. ABABS-

    I read in one of your posts, that the Mrf77 million was the amount spent on political appointees. If true, this is really a drop in the ocean on the grand scale of things. It could be argued that, whether or not the money spent amounts to much, the govt should get rid of the appointees at a time of austerity. This argument is however simplistic given the polarized politics and the politicization of all so called independent institutions.

    It is an open secret that the senior civil servants would prefer the good old days when as long as they remained yes men, mediocrity would be ignored. The govt probably needs loyalists in the ministries to ensure policies are not undermined.

    With regards to responsibilities of the parliament, they are having their cake and eating it too. Thanks goes to the media, which is leaning toward the opposition, nay in bed with the opposition. We do not have the strength in institutions to guarantee justice. There are crazies in most parliaments of the world- a case in point, in Israel recently, MPs tried to pass a law to force Arab Israelis to "Swear allegiance to the Jewish State". This would have gone through but for the Supreme court, which would have tossed the bill as they deemed it violates the Basic Laws of the state.

    This justice is not guaranteed for anybody in the Maldives. Thasmeen and the rest of the DRP loyal to him are now probably realizing this. In their myopic zeal to undermine the "MDP" and the government they turned a blind eye to to the JSC, and allowed them the stuff the judiciary with incompetents whose only qualification happened to be loyalty to the Zaeem. Today they are have filed a case against Zaeem and they probably wish they had done better with the JSC which would have guaranteed every possibility of justice other than justice only when the evidence presented is so clear that injustice would be impossible (even for these cases there are methods in ensuring summons are never served).

  10. @Shaheem, Naju-

    Pls accept my apologies. I tried (unsuccessfully) to be sarcastic.

    "They may start raping our wimmin if we keep them here any longer….time to bring down this dictatorship who has brought IMF here, aye?"

  11. Well devaluation was the necessary decision with down fall in the nation,s economic development and high black market of dollars. All this happens because of the black marketers who sells dollars at such high price which automatically create this whole mess and still no youth movement seen against these bed bugs who taken whole economy down and create this kind of situation for the whole nation.

    These black marketers are really like a bed bugs who lives on the blood of others.

    Why today,s youth not understanding that these bed bugs needs to be thrown out the society so that this nation can be stabilized and become the same growing developing nation of the world.

    Another bed bugs are drug dealers, till now did any youth movement bring any drug dealer in the public and ask justification from him????

    If you people dont have that dare than please stop criticizing the government as government is paralyzed with keeping all these bed bugs .

  12. @Anormous - I will give you a simple analogy that explains the dissatisfaction with and protest against the current administration.

    If you hire someone, say a Marketing expert to increase profits to your company you expect that person to perform. The odds may be stacked heavily against the person. Competitors in the market and existing market conditions might pose huge challenges to achieving the objectives for which that person was hired.

    However, such a person cannot be expected to complain and blame this and that for his failure to deliver. If that person does so, then the company will not hesitate to fire that person within the existing legal framework to do so.

    The main difference between this analogy and the Presidency to which I am making a comparison is that the legal framework does not allow for expedient removal of the President.

    The President himself has seen the need to ensure that the means by which he can be removed, cannot be employed by those who oppose him.

    However, by lawful or unlawful means, when the very livelihood, safety and security of any community/organization/association is threatened, the threatening organism will be expelled. If it cannot be, then it becomes an incurable virus and will cause the downfall of its host body.

  13. @tsk tsk

    My friend did you read mine comments properly, i am asking not a single action from government, i am trying to increase the public awareness that today,s situation is just because of the laziness of the local authorities and most importantly the coward public who never rise against the evil.

    All they are interested in just to accommodate themselves in extra martial affairs and then crying for their basic needs.

    In spite of this if today,s youth keep their voice against bed bugs( black marketer and drug dealers) this nation will automatically come back into track of development.


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