Politics – Page 96 – Minivan News

MDP says poorly prioritised 2015 education budget will lead to corruption

The Maldivian Democratic Party (MDP) has said that the poorly prioritised education sector of the 2015 state budget is structured in a way which will eventually lead to corruption.

While speaking at a press conference, MDP education and training committee chair and former education minister Dr Musthafa Luthfee criticised the allocation of a large budget to the education ministry without proper planning.

“A lot of money from the budget has been allotted to the education ministry,” claimed Dr Luthfee. “This includes the salaries of eight new political figures to be hired to the ministry bringing the total of political figures to 20.”

MDP’s budget review committee earlier this week previously accused the 2015 state budget of being ‘aimless’ and criticised it heavily for not being goal-oriented.

The record MVR 24.3 billion (US$ 1.58 billion) proposed budget for 2015 is currently at the committee stage in the Majlis, where today’s session was held behind closed doors for the first time in the legislature’s history.

Dr Luthfee today claimed that the education budget of MVR2.45 billion (US$ 160 million) had no connection whatsoever to the government’s manifesto which had promised to bring ‘innovative’ changes to the sector in the upcoming year.

Education minister Dr Aishath Shiham last week said “significant changes” had been brought to the education sector during the first year of the current administration, including introduction of Quran as a subject for grades one to seven, Arabic language in 20 schools, and vocational training.

A volunteerism programme and a new “vocational education stream” would also form a major part of next year’s plans for the sector, she added.

Malé City Council Deputy Mayor Shifa Mohamed – herself a former minister of education – alleged that the government had not budgeted the required MVR532 million (US$34.5 million) needed to raise the salaries of teachers despite promises made by both President Abdulla Yameen and Vice President Dr Mohamed Jameel Ahmed.

The Teachers Association of Maldives (TAM) has threatened to stop work numerous times this year, demanding the government to reform the education system and to settle the pay discrepancies.

After a full strike appeared inevitable in September, discussions with the government appeared to have gained results, with TAM expressing confidence that the president was attending to the issue.

The MDP education committee also expressed concern over the MVR481 million (US$31.25 million) increase in the recurrent expenditure of the ministry while questioning the need for 2,159 new staff to be hired under the ministry.

“Current teacher to student ratio stands at 1 to 9. We don’t understand the need to increase the number of teachers while the current teachers are not getting proper pay and the schools are in need of new facilities,” said Shifa.

The government currently employs just under 25,000 civil servants, representing over seven percent of the population. Finance minister Abdulla Jihad told the public accounts committee last month that government would freeze recruitment for 2015 in a bid to control spending.

Shifa today commented on the lack of allocated funds for the government’s promises to provide Arabic language as an additional subject in all schools and to ensure that Quran education is included in all stages of education.

The education committee’s vice-chair, Shaifa Zuabir expressed the committee’s concern over promises to make the Maldives Polytechnic a central hub in training the 95,000 individuals who are to be provided with employment during President Yameen’s government.

“95,000 individuals are to be trained from Maldives Polytechnic,” said Shaifa. “Yet we see the Government has only assigned a mere MVR 13.4 million (US$ 870,000) to Maldives Polytechnic.”

MDP Vice-Chair Ahmed Ali Niyaz claimed the 2015 budget is not different from those during former president Maumoon Abdul Gayyoom while stating the budget ‘serves for administrative purposes alone

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Brother of official implicated in MMPRC corruption scandal nominated for Auditor General

President Abdulla Yameen has nominated a family member of a state official implicated in corrupt transactions worth US$6million for the post of Auditor General (AG).

Nominee Hassan Ziyath is the brother of Managing Director of state-owned Maldives Marketing and Public Relations Corporation (MMPRC), Abdullah Ziyath.

In a damning audit report on October 29, incumbent AG Niyaz Ibrahim accused Abdulla Ziyath of illegally pushing through a US$6million loan from state funds to two private companies.

The report was released a day after ruling Progressive Party of the Maldives (PPM) MPs brought a surprise amendment to the Audit Act requiring the reappointment of Auditor General within 30 days. The President’s Office opened up applications for the position immediately.

Niyaz has only served three years of his seven-year term.

The PPM holds a majority in parliament with 43 of the total 85 MPs, while coalition partner Maldives Development Alliance controls five seats.

Hassan Ziyath is currently the chairman of the Housing Development Corporation (HDC). He contested in March’s parliamentary elections for Malé’s Hulhuhenveiru constituency on the PPM ticket.

The MMPRC audit also implicated Tourism Minister Ahmed Adeeb of involvement in the corrupt transactions and said the loans were issued to companies owned by Adeeb’s family members.

Adeeb has condemned the report as politically motivated, and accused Niyaz of colluding with MP and former Deputy Speaker of Majlis Ahmed Nazim to discredit him after he refused to back Nazim for the Majlis Speakership in May.

In an interview with newspaper Haveeru, Niyaz dismissed Adeeb’s claims and accused Adeeb of threats and harassment following the Auditor General’s decision to look into the case.

The independent AG position was created in 2008 and vested with the power to audit all state offices, institutions funded by the state, and companies in which the state owns shares.

The auditor general’s position receives a salary equivalent to the president’s salary, currently MVR100,000.

The country’s first independent Auditor General Ibrahim Naeem was sacked by former President Maumoon Abdul Gayoom’s former party Dhivehi Rayyithunge Party (DRP) in 2010 for allegedly using state funds to buy a tie and visit Baa Atoll Thulhadhoo Island. Gayoom currently heads the PPM.

During the multiparty elections of 2008, Naeem had published several audit reports revealing high levels of corruption within Gayoom’s government.

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EU demanded same sex marriage, freedom of religion, claim ministers

The European Union (EU) demanded legalisation of same sex marriage and freedom of religion in return for extending duty-free status to Maldivian exports of canned tuna, Economic Development Minister Mohamed Saeed and Fisheries Minister Dr Mohamed Shainee have claimed.

At a press conference this afternoon, Saeed said that the reason for the EU’s decision was the Maldives’ refusal to accept the condition for “allowing homosexual relations and the opportunity for people to follow any religion they want”.

“The Maldives is an Islamic state and will remain so. We will uphold Islam. We will not compromise on anything that conflicts with Islam,” he said.

Last year, the government’s application for a year’s extension under the ‘GSP Plus’ program was declined as it had not ratified all 27 required international conventions. The Maldives holds reservations concerning the freedom of religion component of the International Covenant on Civil and Political Rights (ICCPR).

Dr Shainee said there was consensus among the public that same sex marriage and freedom of religion should not be allowed in the Maldives.

The ministers accused the opposition of attempting to deceive the public and obstructing the government’s development efforts.

Shainee said the opposition was twisting and distorting statements from government officials to divert attention from the government’s achievements during its first year in office, attempting to cast a “shadow” on the government’s achievements.

He accused former President Mohamed Nasheed of providing false information to foreign parties with the intention of “creating distrust towards the Maldivian people” and turning foreign nations against the Maldives.

The Maldivian people would suffer the consequences of the opposition’s alleged attempts to worsen relations with India and Europe, he said.

India has suggested remarks made in the People’s Majlis by Dunya last week regarding Sino-Indian talks on the Maritime Silk Road project were misleading, prompting government politicians to suggest the MDP was behind the confusion.

After publishing what is claimed to be evidence of the supposed discussions having taken place yesterday, Indian High Commissioner Rajeev Shahare tweeted a link to the official joint statement released at the conclusion of September’s talks between President Xi Jinpeng and Narendra Modi.

The 28-point statement contained no mention of the silk road project, while the Chinese press release referred to by the Maldives government mentioned that the two governments “should” work within the silk road framework.

Looking East

In his Republic Day address yesterday, President Abdulla Yameen accused the EU of imposing trade restrictions on the Maldives for refusing to change or abandon Islamic principles.

Until January 2014, fish exports to the EU – the single largest export partner by value – were duty-free under the Generalised System of Preferences (GSP) programme, a non-reciprocal trade agreement extended to developing countries.

Thailand, Ecuador, and China also lost GSP benefits this year.

The Maldives was forced to apply for GSP Plus status as a result of its graduation from least developed country status – a change President Yameen has noted as bringing “enormous challenges and hardships”.

President Yameen said yesterday trade and economic cooperation with China does not involve the same challenges to remaining an Islamic state posed by “Western colonial powers.”

“Participating in business with China does not involve any such compulsion for us,” Yameen said.

Former Fisheries Minister Shafeeu told Minivan News in November 2013 that the Maldives would lose its competitive advantage over the larger fishing fleets of nearby Sri Lanka and Thailand with a 14-20 tariff on fish imports, and reduce profits to “a marginal value”.

President Yameen said there was “no way forward” for the country on the issue.

“The government’s thinking is changing towards the East,” he said. Under the Maldivian Constitution, all citizens are required to be Sunni Muslim and the practice of other religions as well as places of worship are prohibited.

Shainee noted that the EU was still the Maldives biggest partner for fish exports and stressed that closer ties with China does not entail worsening relations with India or other friendly nations.

The government has been looking for new markets for fish exports – such as China, the Middle East, and America – and have introduced longline fishing, he added.

Of the companies responding to request for proposals from the government for infrastructure projects, Saeed said today that a large percentage were from China.

An agreement has also been signed between China and Maldives to form a joint commission on trade and economic cooperation, he added, which would facilitate economic growth.

Saeed also noted that China represents 40 percent of tourist arrivals to the Maldives.

The government decided to participate in the Chinese 21st Century Maritime Silk Route initiative because China is currently the strongest and fastest growing economy in the world, President Yameen said yesterday.

As a result, Yameen continued, the government believes that the “multi-million dollar infrastructure investment” needed for economic development would “arrive through this door.”

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Nasheed questions government’s legitimacy and record as one-year anniversary looms

Maldivian Democratic Party (MDP) President, Mohamed Nasheed has criticised the government for failing to keep promises made when it came to power almost one year ago.

Beginning by questioning the manner by which President Abdulla Yameen came to power, the former president suggested the election coalition had faltered and investor confidence had not been restored.

While giving an interview to Raaje TV last night (November 11), Nasheed also slammed the government for its failure to respond adequately to the abduction of Minivan News journalist Ahmed Rilwan 96 days ago.

“There is no doubt that Rilwan was abducted. All the information obtained by the police and other separate investigations point to an abduction,” said Nasheed.

Recalling the much-delayed, and once-annulled presidential elections last year, Nasheed reminded viewers that yesterday’s Republican Day has traditionally seen the start of a new presidential term.

“Republican Day has always been the day when the new presidential term begins and ends,” said Nasheed. “However, President Yameen’s gave oath after the assigned date. This raises legitimacy issues with how the Government came to power.”

Last year’s Republic Day saw former President Dr Mohamed Waheed inform the nation that he would stay in power for one week beyond the constitutional end of his term in order to avoid a power vaccum after repeated delays in the poll to find his successor.

The 2013 presidential elections eventually saw the MDP and Progressive Party of Maldives (PPM) candidates contesting the second round, with the PPM’s Abdulla Yameen eventually winning the election after forming a coalition with the Jumhooree Party (JP).

“Recent events have made it clear the that the coalition has failed,” said Nasheed in reference to the government’s acquisition of JP leader Gasim Ibrahim’s Kaadedhoo Airport after the MP spoke against the government’s flagship Special Economic Zones (SEZ) bill.

Nasheed noted that the people in charge of the government right now received a very small percentage of the total votes once the votes from JP supporters were discounted.

Promises broken

Nasheed pointed out that the government made a lot of promises towards the betterment of fishermen – including a pension of MVR10,000 (US$650) which was not included in next year’s proposed budget. But the price per kilo of tuna has dropped from a healthy MVR18 during Nasheed’s government to a mere MVR6 today, he continued.

President Yameen recently announced a foreign policy shift from west to east, partly as a result of the Maldives’ failure to qualify for extended duty-free status for fish exports after non-compliance with international conventions concerning freedom of religion.

Nasheed also attacked the government’s SEZ Act, suggesting that there has been little interest shown by foreign investors even after all the necessary laws and regulations have come to place.

The SEZ act – which offers relaxed regulations and tax concessions – described by President Yameen as a landmark law that will “transform” the economy through diversification and mitigate the reliance on the tourism industry.

While speaking about the proposed 2015 annual budget, Nasheed said that like during Maumoon Abdul Gayyoom’s 30-year regime, the current government has included a large sum as expected earnings which would eventually lead to higher budget deficit.

“For example, expected earnings from SEZ investments is valued at MVR1.5 billion (US$ 100 million). This is ambitious and unrealistic,” explained Nasheed.

The 2015 annual budget includes MVR3.4 billion (US$220 million) as expected revenue from brand new income generating measures including acquisition fees from SEZ investments and the introduction of a green tax on tourism.

A recent MDP budget review concluded that such expectations were unrealistic after stating that even if the government were to obtain MVR1.5 billion (US$100 million) as acquisitions fees at a rate of 10 percent of the investment it suggests an investment of US$1 billion.

The single biggest investment in the country to date was the ill-fated MVR7.6 billion (US$ 500 million) deal with India’s GMR group for the development Ibrahim Nasir International Airport in 2010. A Singapore court of arbitration is currently evaluating the amount owed by the government for the wrongful termination of the deal in November 2012.

The former president described the government’ abrupt terminations of foreign investments as saddening, suggesting that it would decrease investor confidence in the nation.

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MDP says government should decrease foreign relations budget to fit “policy of exclusion”

The opposition Maldivian Democratic Party (MDP) has called on the government to decrease its budget allocation for foreign relations, saying current policy made such expenditure unnecessary.

“Such an increase in funds will not be needed as the incumbent government has revealed that its foreign policy is one of exclusion,” said former Speaker Abdulla Shahid.

Speaking at a press conference given by the International Relations Committee of the MDP today (November 12), Shahid said that the current budget allocation was too great for such a policy.

“From the president’s speech on Republic Day, as well as various other statements by himself and foreign minister Dunya Maumoon, it has become apparent that this government’s key foreign policy strategy is to exclude itself and cut ties with the rest of the world”.

Speaking on the occasion of the Maldives’ Republic Day, President Yameen yesterday criticised “Western colonial powers” for anti-Islamic policies, suggesting that the Maldives was turning east toward China as a partner which does not involve such challenges.

Meanwhile, Yameen’s enthusiasm to participate in China’s silk road project has prompted opposition fears of strained regional relationships. The government maintains, however, that it is watchful of regional security issues.

The Yameen administration has pledged an improved foreign investor environment in order to restore confidence in local investment. Despite the introduction of the Special Economic Zone Act in August, the only najor interest shown in the government’s proposed ‘mega projects’ has come from China.

Shahid stated today that the budget allocations for foreign relations had risen by 22.7 percent from 2013 to 2014, and that the estimated MVR533 million (US$34.5 million) in the 2015 budget amounted to an increase of another 20 percent.

“An increase in this budget should only come in a government which is aiming to build ties with the international community, not break them. The MDP maintains that the budget should be reflective of the government’s policies,” he added.

Shahid highlighted that in 2014, the government shut down or downgraded a number of international missions.

He also took the closure and reopening of the missions in Bangladesh and the United Arab Emirates as examples of the government’s weak foreign policies.

“Such indesicive action in matters like this affects relations with these countries. Additionally, the government has also downgraded the mission in London, which indicates that the government has no interest in maintaing strong ties with UK or the Commonwealth,” Shahid said.

The MDP alleged that such actions demonstrate to the world that the incumbent Maldives government does not have a long term foreign relations plan or objectives.

The MDP also expressed concerns that the number of political positions in foreign missions are on the increase.

“I don’t see why taxpayers should continue to pay for PPM activists to fill positions at foreign missions, when they don’t do any constructive work and do not even possess the skills necessary to do the required work,” Mariya Ahmed Didi stated.

Shahid added that the increase in political positions posed a disadvantage for better trained senior professionals at the Ministry of Foreign Affairs, whose opportunities to work at foreign missions have decreased by half within the year.

He also emphasised the failure to provide incentives which allow female professionals to take up jobs in foreign missions, including allowances for child care and education.

Shahid went on to say that , while the next session of the SAARC Summit is scheduled for 2015, he feels that the government should exclude budget allocations for the event as past actions show the government “has no interest or intention to maintain ties or hold discussions” with neighbouring countries.

“The MDP maintains that its foreign policy will always remain non-discriminatory and open to all countries. We will continue to build ties with any interested countries as much as we can without compromising our country’s sovereignty or independence”.

The Maldives currently has 13 overseas diplomatic missions in China, Saudi Arabia, and Japan, with high commissions in Sri Lanka, Pakistan, India, Malaysia, Singapore, and the United Kingdom.

The Chinese mission in Malé is the latest addition to the Maldives’ small diplomatic circuit which otherwise includes only the SAARC countries of Sri Lanka, India, Bangladesh and Pakistan.

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State budget for 2015 will be balanced, insists President Yameen

The record MVR24.3 billion (US$1.5 billion) state budget for 2015 submitted for parliamentary approval last week is a balanced budget, President Abdulla Yameen insisted yesterday in his Republic Day speech.

Referring to the Progressive Party of Maldives’ (PPM) campaign pledge to balance the budget in two to three years, President Yameen said the 2015 budget has a “primary balance surplus.”

“Looking at the figures of the budget, that is not a deficit we cannot plug. The deficit is a small figure,” he said.

The projected fiscal deficit in 2015 is MVR1.3 billion (US$84 million) or 2.5 percent of GDP.

The deficit was not for the state’s expenditure in 2015, Yameen continued, but for arrears or unpaid bills from recent years.

“So in my book, the 2015 budget is a balanced budget,” he said.

In his budget speech to parliament last week, Finance Minister Abdulla Jihad revealed that the forecast for recurrent expenditure in 2015 is MVR15.8 billion (US$1 billion) while the forecast for government income or revenue is MVR21.5 billion (US$1.3 billion).

The projected revenue includes MVR3.4 billion (US$220 million) anticipated from proposed new revenue raising measures.

A balanced budget would allow the government to “consolidate the economy,” maintain the value of the rufiyaa, and repay foreign and domestic debt, Yameen said.

After balancing the budget, Yameen said the government should work toward achieving a surplus.

The public expected waste management systems, water and sewerage, harbours, and land reclamation, he continued, noting that the MVR6.3 billion (US$408 million) Public Sector Investment Programme (PSIP) in the 2015 budget – 24 percent of the budget – was unprecedented and double that of 2014.

Yameen observed that the PSIP budget was around MVR3 billion (US$194 million) in the past.

While carrying out infrastructure projects in all 188 inhabited islands in one year would not be possible, Yameen said the budget was formulated after prioritising developmental projects.

Moreover, the government would seek foreign aid, soft loans, and concessional loan assistance to finance infrastructure projects, he added.

The budget also includes welfare or social security benefits for the needy, the elderly, and persons with special needs, he noted.

The MVR5,000 (US$324) a month allowance or old age pension would be provided in 2015 as well, Yameen said, while subsidies for food and electricity would be targeted to the needy.

Achievements

On the government’s achievements during its first year in office, Yameen said the economy was improving as a result of the government’s policies.

The acute dollar shortage of recent years has been alleviated, he added, while the ‘unlimited’ Aasandha insurance scheme was introduced to assist persons with chronic illnesses.

While there were only nine pharmacies in the atolls last year, the State Trading Organisation has opened 71 pharmacies in various islands this year.

Moreover, sea ambulance service was provided to six atolls, he continued, and a 50-bed multi-speciality hospital would be built in Hulhumalé within three years.

Efforts were underway to install generators across the country to ensure reliable round the clock electricity in all inhabited islands, he said.

The Special Economic Zone Act would meanwhile facilitate attracting foreign investment, Yameen said.

The government has also decided to provide sovereign guarantee for loans to develop new resorts, he continued, while the guest house island policy would benefit small and medium sized enterprises.

The government’s plan to create 94,000 new jobs as pledged during last year’s presidential campaign was through economic diversification or development and not through the civil service, he noted.

On the pledge to develop a ‘youth city’ in Hulhumalé, President Yameen said the second phase of the island’s development through further land reclamation would begin during November.

Work has also begun on introducing an insurance scheme and providing subsidies to fishermen and farmers, he added.

The implementation of the new national education curriculum in 2015 would meanwhile bring “revolutionary changes” to the education sector, Yameen said.

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President Yameen slams “Western colonial powers,” declares foreign policy shift to East

The European Union (EU) imposed restrictions on Maldivian export of canned tuna for refusing to change or abandon Islamic principles, President Abdulla Yameen claimed today, declaring a foreign policy shift to the East.

In his address to the nation on the occasion of Republic Day, President Yameen said economic cooperation with China does not involve the same challenges to remaining an Islamic state posed by “Western colonial powers”.

“Participating in business with China does not involve any such compulsion for us,” Yameen said at a ceremony at the Dharubaaruge convention centre this morning.

Yameen referred to the EU’s refusal to extend the duty-free status of imported fish from the Maldives following the country’s failure to comply with international conventions concerning freedom of religion.

President Yameen said there was “no way forward” for the country regarding the issue.

“The government’s thinking is changing towards the East,” he said.

Under the Maldivian Constitution, all citizens are required to be Sunni Muslim and the practice of other religions as well as places of worship are prohibited. Customs authorities forbid the import of religious items and scan the baggage of tourists arriving at the airport.

Former Minister Shafeeu explained last year that the EU’s move was not unexpected as Maldivian fisheries had been given a three year extension of its duty-free status after graduating from the UN’s definition of a ‘least developed’ country to ‘middle income’ in 2011.

Silk Route

As a result, Yameen continued, the government believes that the “multi-million dollar infrastructure investment” needed for economic development would “arrive through this door.”

Participation in the Silk Road initiative would not adversely affect either the Maldives independence and sovereignty or the Islamic identity of the nation, he insisted.

Ahead of his maiden state visit in September, Chinese President Xi Jingping called on the Maldives “to get actively involved” in the creation of a maritime trade route linking China to the east coast of Africa and the Mediterranean.

Meanwhile, former President Mohamed Nasheed has criticised the decision to join the Silk Route initiative, contending that it would threaten Indian Ocean security and risk putting the Maldives in the middle of war or disputes between Asian powers.

“Indian Ocean stability depends on a firm Indian hand. President Yameen must reverse his decision on Maldives being a party to the Silk Route,” the opposition leader tweeted on November 8.

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Chinese documents show silk route was discussed with India: Foreign ministry

The Maldives Ministry of Foreign Affairs claims there is evidence that the Maritime Silk Road was discussed during Chinese President Xi Jinpeng’s visit to India in September.

“Publicly available documents clearly indicate that the maritime silk route was one of the points of discussion during the Chinese Presidential visit to India,” read today’s press release.

Controversy over the issue began last weekend after India rebutted suggestions made in the Majlis by foreign minister Dunya Maumoon that it had discussed participating in the proposed trade route.

The ministry today referred to a press release from the Chinese Ministry of Foreign Affairs, dated September 18, which detailed the talks between the heads of state before including what appear to be unattributed quotes from President Xi himself.

“Both sides should accelerate the construction of the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor, conduct cooperation within the frameworks such as the Silk Road Economic Belt, the Maritime Silk Road of the 21st Century and the Asian Infrastructure Investment Bank to promote the process of regional economic integration and connectivity,” read the Chinese foreign ministry press release.

However, comments from the Indian minister of external affairs released by the Indian High Commission in Malé on November 7 stated the issue “was neither raised nor discussed” during President Xi’s meeting with Prime Minister Narendra Modi.

A 28 point official joint statement released at the conclusion of the September visit also failed to mention the silk road initiative. The statement has not been published by the Chinese foreign ministry.

Shortly after India’s rebuttal, the Maldives Ministry of Foreign Affairs responded by noting Dunya’s “concern if her choice of words had led to any confusion”.

Today’s statement from the ministry followed the opposition Maldivian Democratic Party’s (MDP) announcement that it would bring a no-confidence motion against the foreign minister in the Majlis, as well as calling on the speaker to prosecute her under the Privileges Act.

“The people of Maldives is gravely concerned with MDP and MDP sympathetic media pushing forward the interest of a foreign country while ignoring the Maldivian interests,” added today’s foreign ministry statement.

Minister at the President’s Office Ibrahim Shareef, yesterday explained that the “false” allegations spread by the opposition were being shared with both the Indian and Chinese governments.

“Everything they write, be it written in Dhivehi, have been translated and shared with the relevant authorities.I think it is about time they start preparing responses to the international community, which is going to demand answers soon,” explained Shareef.

Fellow cabinet member Dr Mohamed Shainee had told the media on Sunday November 9 that the Indian response to the comments were not necessarily indicative of the government’s view.

“We saw the news recently where the minister of a neighbouring country said something and it was said that it wasn’t the government’s view but the view of an individual minister,” said Shainee during a Progressive Party of Maldives (PPM) press conference.

Minivan News was unable to obtain comment from the Indian High Commission today, with official procedures requiring approval from New Delhi before the issuance of public statements.

The PPM had accused the opposition of twisting the story in order to harness attention from the international community and to divert attention from the one year anniversary of President Abdulla Yameen’s term.

Yameen has responded favourably to urgings from the Chinese government to join the Silk Road scheme, which seeks to create both land and maritime trade routes linking China to the east coast of Africa and the Mediterranean.

Today’s foreign ministry statement concluded by reiterating that Yameen’s decision to participate was taken with the aim of protecting Maldivian sovereignty while ensuring that national and regional security would be considered.

“[A]s Maldivian national security is closely linked to the Indian Ocean’s security, the government will engage in discussion with all relevant nations before making decisions which might endanger the security of the region.”

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MPs quiz finance minister about revenue raising measures

MPs on the budget review committee quizzed Finance Minister Abdulla Jihad yesterday about revenue raising measures proposed within the record MVR24.3 billion (US$1.5 billion) state budget for 2015.

Briefing the committee yesterday (November 10), Jihad explained that MVR3.4 billion (US$220 million) in additional revenue is anticipated from raising import duty rates from July onward and introducing a ‘green tax’ for tourists.

Additionally, acquisition fees from investments to special economic zones (SEZs), income from the home ownership programme, and leasing 10 islands for resort development would help raise the forecast revenue.

The minister also told the committee that domestic debt had reached about MVR20 billion (US$1.2 billion)- 39 percent of GDP -making the rolling over of T-bills “a nightmare”.

The government was considering increasing custom duties “mostly for luxury items, or items that are harmful to the environment or health,” he said.

The cabinet’s economic council has not yet finalised the import duty or tariff revisions, Jihad noted, though he did reveal that the items under consideration include tobacco, perfume, and vehicles.

Tariffs for tobacco would be raised from the current 150 percent to 300 percent while duty would be raised from 100 to 150 percent for cars, and zero to 10 percent for perfume, Jihad said.

Asked if higher custom duties would lead to higher prices, Jihad said the impact on the inflation rate would have to be studied, which would take time to complete.

Jihad stressed that the government has ceased deficit monetisation – borrowing money from the central bank to finance the deficit – in May, as a result of which the inflation rate was reduced to 1.4 percent.

In April, parliament approved import duty hikes for a range of goods proposed by the government as a revenue raising measure.

Meanwhile, the forecast for income from SEZ acquisition fees is US$100 million, Jihad revealed, which is expected by August 2015.

A further MVR400 million (US$25.9 million) is forecast from leasing and sale of land from across the country, Jihad said – in particular, plots from unused reclaimed land in various islands.

The state-owned land designated for leasing or sale falls under three categories, he explained, which were residential, commercial, and industrial.

Moreover, 10 new islands would be leased next year for resort development, he continued, which would generate income for the government in the form of acquisition costs.

As an incentive or relief for new resorts with development stalled due to financial constraints, Jihad said the government would waive import duties for construction material or capital goods next year.

Tourism Minister Ahmed Adeeb revealed yesterday that a green tax of US$6 per night would be introduced in November 2015 and guest houses would be exempt from the tax.

Jihad said the income from the green tax would be used for water, sewerage, and coastal protection projects.

Of the proposed revenue raising measures, import duty revisions and introduction of a green tax would be subject to parliamentary approval, which the finance minister hoped would be granted as the budget was passed.

Legislative compromises to new revenue measures led Jihad to express fears in August that the predicted state deficit for 2014 would more than double in 2014.

State debt

The outstanding stock of treasury bills (T-bills) is currently MVR10 billion (US$648.5 million), said the finance minister.

In his budget speech last week, Jihad observed that the state’s debt would reach MVR31 billion (US$2 billion) or 67 percent of GDP by the end of 2014.

Expenditure on state employees in 2014 would reach MVR15.8 billion (US$1 billion), Jihad observed, while MVR3.2 billion (US$207 million) would have been spent on subsidies and social security benefits.

Consequently, the government was facing serious difficulties in “managing the state’s cash flow and financing the budget” as well as securing loans for budget support, Jihad said.

According to the central bank, the total outstanding stock of government securities was MVR13.6 billion (US$881 million) at the end of September.

Spiralling debt is threatening “the economy’s health”, Jihad said yesterday, with the rolling over T-bills proving to be difficult as the ministry has to plead with banks for extension of repayment periods.

“For example, if MVR600 million matures this week and there is MVR700 million in the public bank account, if the MVR600 million is rolled over there’ll be MVR100 million. How can we run the state with that? It can’t be done,” he explained.

The solution was raising additional revenue by utilising resources such as uninhabited islands, he continued, and appealed for cooperation from parliament. Additionally, the government was trying to extend the periods for repayment of debt.

The interest rate for T-bills is currently 7.5 percent, Jihad said, down from 10 percent before the current administration took office.

“This year we estimate that MVR1.2 billion worth of T-bills have been used by the state for finances. In 2015, it will be MVR440 million,” he noted.

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