President cuts ministers’ pay as part of austerity drive

President Abdulla Yameen has informed state ministers that their pay will be cut in accordance with the government’s plans to reduce state expenditure.

Local media has reported that all deputy and state ministers will have their salaries reduced from  MVR35,000 to MVR30,000, and from MVR46,000 to MVR41,000, respectively, reports local media.

“President’s decision comes under the government’s policy to reduce expenses. He plans to do a lot more in this regard,” President’s Office Spokesman Ibrahim Muaz told local media.

The wage reductions represent an average cut of around 12.5 percent for these political appointees – a group whose pay Yameen had pledged to slash by 30-50 percent during the presidential election campaign.

Muaz was not responding to further queries at the time of press.

The President’s Office website currently lists the executive as having 46 deputy ministers, including Abdulla Waheed and Abdul Haleem Abdul Gafoor who were today appointed to the Transport and Finance Ministries, respectively.

The number of state ministers currently stands at 31, with three new ministers – Dr Hala Hameed (Ministry of Health), Hassan Shah (Ministry of Environment and Energy), and Mohamed Anees (Ministry of Transport) – appointed within the past 24 hours.

The potential savings could remove MVR385,000 (US$25,000) from the creaking state budget – submitted to the Majlis this week at a record MVR17.5 billion (US$ 1.1 billion), with a projected deficit of 2.2 percent of GDP.

The rise in total expenditure from MVR16.4 billion to MVR17.5 (US$ 1.1 billion) is mainly due to a MVR 1.1billion (US$72.6million) increase in recurrent expenditure, which continues to account for over 73 percent of the state budget.

In his inauguration speech, Yameen warned the country’s economy was in “a deep pit” and pledged to reduce state expenditure. Local media reports quote Yameen saying he would cut expenditure by amounts varying between MVR 1 billion and 4 billion.

Immediately after being sworn in on November 17, Yameen announced he and his vice president – Dr Mohamed Jameel Ahmed –  would be fulfilling his campaign promise of only taking half of the MVR100,000 (US$6500) salary afforded to the head of state.

“The reason behind this is that Dr Jameel and I both live a simple life. No matter what has been said about us we are not wealthy. We want to be an example to others and lead by example,” Yameen said.

During the election campaign, Yameen also promised reduce the salaries of independent institutions – a step he described as pivotal for the country to avoid a sovereign default.

Following this week’s announcement of next year’s proposed budget, local media reported independent institutions as telling the Majlis budget review committee that the projected cuts would leave it unable to pay salaries.

The reduction in minister’s pay closely follows the release of a World Bank report noting that the Maldives was “spending beyond its means”.

According to the report, an already excessive wage bill ballooned by 55 percent in 2013 due to the Supreme Court ordered back payment of salary cuts, and salary increases for the police and military.

The Maldives has one of the highest percentages of government employees to population of any country in the world, at around 11 percent. During his election campaign, Yameen promised to further increase the salaries of civil servants.

In order to finance the deficit, the World Bank report suggested that the Ministry of Finance and Treasury was undertaking measures that “pose macro risks” and have led to “significant accumulation of debt in a short period of time.”

At present, public debt stands at an “unsustainable” 81 percent of GDP, the report stated. The World Bank projects the debt will rise further to about 96 percent by 2015.

“This debt path is unsustainable and suggests there is little room for additional borrowing,” the report warned.


6 thoughts on “President cuts ministers’ pay as part of austerity drive”

  1. Any one can do spending cuts. It does not need a genius to do that.

    What is needed is to stimulate the economy and spending cuts will not stimulate the economy.

    There is obviously no creativity in this gov. It it has, that has not been seen yet.

  2. $ 25.000 a year/month/week/day/hour?

    This symbolic amount is going to save the country!!!!!!

  3. The less the pay of the ministers, the more likely that they will become corrupt
    to survive or to match the tycoons.

  4. Any dumb ass can stimulate the economy if you have active intelligent people in the society. Every bagger wants to sit in a government office, chit chat, eat killey and get paid for praying 5 times a day. Use all logical fallacies to justify the inefficiency and laziness and dumbness of these morons and blame the government for their own handicap. If someone want stimulate the economy through openness and liberalism, baggers go against it with fear of stepping out of comfort zone and are deluded by myths of ancient people that money is something Allah rains from the sky, because this is the best way of justifying the laziness and put all responsibility to someone in the sky. It is all the will of this imaginary fellow in the emptiness.

  5. Cutting the salaries of ministers is just a drop of water in the ocean. Those in power and their relatives enjoy benefits that all common people dream of: owning, renting and selling islands. The sad culture here is to earn big without working. Even those who go for lengthy studies if they come back they just want to relax and make their qualifications alone earn them money without sweating.
    The key to development would be to educate the young people to work hard and be productive.
    We also need to reduce the number of unproductive people who are just making the numbers in most offices earning an income to pay rent to another person who is not working and enjoying life overseas simply because his parents were fortunate enough to own a place in Male.

  6. This is a good move. Although as everyone points out - it is more symbolic than not.

    However it holds potential benefits if Parliament would follow suit and also other elected officials. That is, if the President's own initiative sparks a domino effect of more elected officials voluntarily taking pay cuts to score points with the public. If so the gesture has worked. If not then yes it remains merely symbolic.

    We shouldn't attack something just for the sake of it. Let us wait and see. Let us also pressure our elected representatives to make the same gesture. Then maybe, just maybe, the rest of the country would also be willing to shave a few rufiyaas of their pay checks.


Comments are closed.