“Prices of goods have been a lie”, says President Nasheed

Extract from a speech given by President Mohamed Nasheed at Sunday night’s Maldivian Democratic Party (MDP) rally, concerning the state of the economy.

Our nation remains a nation, as I often say, because our ancestors went fishing, collected cowries, climbed palm trees, constructed boats, built resorts and operated them. Our nation remains a nation not just because rulers ruled and judges judged. Our nation remains a nation because workers have laboured.

The rights of Maldivian workers and various benefits are not being spoken about in this country today for the first time. In the 1700s, Judge Hassan Thajudheen forbids Maldivians from working without remuneration. From that day onward, Maldivian workers from day to day have been noting their rights, and their responsibilities as well, to the present day.

In our country, if we want to bring the labour market to the right path, we have to look at or consider not just the worker. I always say, to do something, you have to do something else. After continually doing that, when what we envisioned has been reached, then what we want will have been sustainably achieved.

Prices of goods are not lowered with an army officer in front of the shop. To bring down prices, we have to build a good, strong economy. We have to change our economy into the shape of a strong economy of a middle-income country.

This was not the case yesterday. Most of the goods we sell in this country are imported. We pay for it in dollars. When we don’t know the value of the dollar – that is the goods in the market were bought with dollars and we don’t know its value – there is not a single way for us to know the value of the goods we have bought. Therefore, there’s no way we can know anything.

To build an economy on that basis and to consider it a sound economy is a mockery. It is not something I can do. I too know, [MDP MP] Alhan has said very clearly, we can keep building and building and building debt. The law very clearly gives me the discretion to print money. For the first three months after I assumed office, at the end of every month I was brought a piece of paper, on it was written that I had printed Rf200 million (US$16 million).

With every Rf 200 million, the value of the rufiyaa kept falling. When we took over the government, inflation was at 12 percent. [Prices] were rising at a rate of Rf12 each passing month. Today [inflation] is 0.65.

When prices soared to the highest, the price of a can of powdered milk rose by Rf 4 – two children will drink from one can of milk for a month. How much of an increase in rufiyaa per day has that become for us? I too know the prices of goods in the country. I do go into shops. I know that the price of a small coconut is Rf5 in Filledhoo, but Rf10 in Male’.

We do not lack information. Nor do we lack a course of action. And I am not unaware of what we’re doing and what we are about to do. Leaders of nations are anxious and cowardly when it comes to making changes to the country’s monetary and economic system. They remain hesitant about making changes to salaries, hesitant about making changes to taxation. They remain anxious and fearful of inflation.

However, in truth it is not us who have to suffer from that cowardice today, but our children tomorrow. The question before us today is who should we treat better? The woman we are married to now or our young children? I know it is a difficult question.

Everything we have done in our lives has been for our children. We build harbours for our children; we build homes and sewerage systems for our children. We give pensions as well, for our children.

Today prices of goods have gone up, too, for our children.

The straight value of the dollar to the rufiyaa is not a number I saw in a dream one day and took to heart. The price of a dollar set in 2001 was not based on a transaction between rufiyaa and US dollars. The price of a dollar has been set today based on market transactions. Today you are seeing straight the true price of the goods at market. It is not that prices have not gone up, you have found out the price! What was written before was a lie. It was not a price. It is a picture that rulers have showed you as a price. Our children and children’s children are being destroyed by the seduction of that picture.

Do we want the present or the future? This party was formed because we said ‘we want the future, today is done, the sun has set, what we can win is tomorrow.’ There is no way we can get today. We have to reach, too, for tomorrow.

Most workers in this country are fishermen. 44 percent of the workforce are fishermen. When the value of the dollar is low, its unfairness is felt most by fishermen. The fish they catch is sold out of the country. When the export price improves, the [purchasing] price improves for them. Because the value of dollars has gone up, the income of most workers in the country has gone up exponentially. It has gone up!

I have just come back from Thinadhoo. I went to Kolamafushi too. I know what’s happening in Ihavandhoo and Hoarafushi as well. Maldivian fishermen are today selling a kilo of raw fish for Rf16.50. That is not a price that they would have ever imagined before. A kilo of raw fish for Rf16.50. How much is a cupful of rice? How many cupfuls of rice can you get today for one handharu fish?

I would say the Maldives has not seen any more prosperous times than this.

The second [main source of employment] for workers in the country is in the tourism industry. The service charge in that business is paid in dollars, you know. On April 11, the income of workers in that sector has gone up 20 percent.

About 20 to 25 percent of the workforce in the Maldives is employed by the government. For them, it has become a little bit difficult. Like I said, a Rf4 [increase] from a can of powdered milk, for two children to drink for a month. Total monthly household expenses have gone up by Rf300 or Rf400 for a secretary, for a lawyer, for a labourer. To plug that gap, we must do what we have to do.

The government’s monetary and economic policy is now being implemented. We are now making the changes necessary to instil the characteristics of a middle-income country in our economy. An administrative framework for taxation has been established. A 3.5 percent GST is being levied on tourism services.

The government aim is to completely eliminate import duties beginning on January 1, 2012, for all children’s food, all foodstuff, pens, pencils and paper. We are working towards that end. It will be done on January 1, 2012.

In order to do it, the state needs an additional Rf1.3 billion. Today our budget forecast is Rf2.3 billion as duties. The government is giving up that duty, but while doing so, we have decided to ask the honourable members of the People’s Majlis to increase the tourism GST from 3.5 percent to 5 percent and introduce a 3.5 GST for other businesses.

If we wish to change our economy, we have to make these courageous changes. There is one additional tax. That is, the income tax. It will hurt the most there. We plan to take an income tax from those who earn above Rf30,000 a month. About Rf30 a month. When that amount is paid to the government as income tax, then the whole cycle of the economy will, God willing, become stable – this is where we see ‘The Other Maldives.’

That is where the value of the dollar will be brought down to the level we want and the price of goods and services will fall.

Our task is very clear to me. I know that, God willing, our efforts will bear fruit. This morning, among the changes to be made to the economy, I noted a special point. A lot of workers in the country are foreigners. Most of the time, businesses employ them because they work for cheaper rates. For work done in this country, [a person] should be able to live an ordinary life in this country, whether it is a foreigner or a Maldivian.

The government plans to determine what the minimum wage paid to a worker should be. Here or abroad, when that is paid to workers, we believe job opportunities will not be lacking for Maldivians.

We can bring our country to the right path. I know that there are many people who find what I have to say difficult to hear. But I say repeatedly, I am not someone who will squander our children’s future. We took over government to realise the hopes of the Maldivian people – to establish a system of good governance for the people.

We do not arrest people. We do not torture people. This government will not pillory, handcuff, torture or chain anyone. We talk to the people through verbal interactions, not through fear and intimidation. The Maldives is maturing into a full democracy. The biggest secret of our success is the many citizens of this country fighting for freedom and hoping for better days.

Before concluding, I would tell everyone here not to worry at all. Some nights, they might be squatting at the Chandanee Magu intersection. Other nights, leaning against a door somewhere. We must not be concerned and worried about it. What happened last night was very unfortunate. I didn’t know that protest was going on last night even when I slept.

What I have to say [to the demonstrators] is that our resolve will not be shaken. Neither this party nor I will be shaken. Our policies won’t budge either. God willing, in Alhan’s words, we are going to ‘The Other Maldives’ at maximum.


7 thoughts on ““Prices of goods have been a lie”, says President Nasheed”

  1. Nasheed is shopping from anei dhivehiraajee. Please send us the address of the shop where president Nasheed is buying milk. As far as I know coast milk has increase more than 4 rufiyaa. If this is responsible journalism minivan should have checked if what this guy said is the truth.

  2. I commend Nasheed for stepping up to his responsibilities. Gayoom was too much of a coward to do this when he was in office. Now he and his cronies are doing what they can to poison the Maldivians water well even before they've begun drinking from it.
    Tough times ahead but hopefully there will be light at the end of the tunnel.

  3. Hello Mr.President!

    You have betrayed your nation. Why are you denying the truth. Politicians do lie, but you have gone too far. We don't trust you anymore. Following are things that you have done very wrong.

    1)During MDP rellies you said if elected you would stop the crime and bring peace to the streets of Male' within 24 hours. Affeef had said this many times. Now he is the home minister. ( you couldn't do it and will never be able to do it with the pace and style you are doing it. You always have the excuse of other institutions, like judiciary, etc. This is not acceptable.)

    2) You said local curruncy will not be devalued. ( Now you floated the curruency saying that it is for the long term benifit. Understandable, but why didn't you understand the simple economics before you lied to us.)

    3) You said political posts will be minimal. (You have created so many political posts unnecessarily to keep the MDP activists happy and even after the public rejected them they are still with you. You keep on shuffling like what Gayoom did.)

    4)You said you will eliminate corruption. (you are infact encouraging people to be more corrupt. Why? Instead of bringing the former coruupt cronies to justice, you have brought them closer to you to play politics. Look at Abudulla Shahid, Red Wave Saleem, Zakee, Thasneem, Jaabir, etc......Now your team is worse than Gayoom.)

    5)You said you will not increase the electricity bill (you infact did the exact opposite)

    6)You said you will keep the food prices low. ( Before you said this, why didn't you analyse the inflation levels in world markets. You could have said something sensible to the public)

    This shows lack of experience and awareness on your side. Now your saying that you have taken all these steps for the future of this country. Perhaps true! But who is going to beleive! I doubt, cause your team is not good and will not be able to deliver on time.

    Bye! Bye ! President.

  4. "Before you said this, why didn’t you analyse the inflation levels in world markets. You could have said something sensible to the public"

    I'm presuming he didn't say that because 'If elected, I shall freeze your pay and then raise prices of all food items, electricity and commodities in line with harsh global economic realities" doesn't make for a great campaign speech.

    I am not sure if the current government is either capable or sincere in its efforts to tide over the crisis.

    The sharp spike in prices has hit the middle class very hard - and resembles nothing like the rosy picture the President is attempting to paint of wealthy fishermen and prosperous resort workers.

    The MDP's support base, if the election results are anything to go by, is the urban middle class - and while I'm not qualified to make a judgment on the economic wisdom of the floated dollar, I can easily see how gloomy the mood is in the middle class.

    It would be nice if the government were to lead by example.

    This is a good opportunity for the President to get rid of the unarguably inflated number political appointees, and for the Majlis to consider gently floating back to terra firma.

  5. yaamyn- The appointees were for a reason, to ensure government polices are carried out.There was never loyalty by the old guard to the current President. However, reducing their numbers should start now.

    Mr. President seriously needs to stop talking though. He is not making any sense and only providing fodder to the Zoo-DRPiers.

  6. The Constitution was ushered in during a stalemate in a contest for control.

    Now that Constitution has failed the current President in one key aspect - it does not suitably protect his regime from the opposing tribes.

    Hence, the ruling tribe is now trying to gather public sentiment behind the "Sunset Bill" in order to exercise unchecked authority over the populace and right all the wrongs that democracy has caused during its short term of rule.

    To be fair, the challenges which faced the MDP government were not small at the outset. They themselves acknowledged an ailing economy, crippling poverty levels, poor education, widespread crime and a demoralized public with little or no trust in the political system as problems to be addressed.

    What is clear is that the MDP-led government could not take on those challenges. Their current failure is in an over-reaction to the opposition tribal leaders' success in capitalizing on prevalent public sentiment. Public sentiment is the vehicle which swept the Kerafaa clan into power and public sentiment will determine whether it may stay.

  7. "two children will drink from one can of milk for a month." - President Nasheed...
    Who the **** does he think he is to decide how much milk my daughter should take???


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