IMF warns restoring salaries will “jeopardise” international financing

The International Monetary Fund (IMF) has warned that international funding to the Maldives would be threatened if civil servant salaries are restored to former levels.

“One of the primary drivers of the large fiscal deficit has been government spending on public wages, which has more than doubled between 2007 and 2009, and is now one of the highest in the world relative to the size of the economy,” said Rodrigo Cubero, IMF mission chief for the Maldives.

“Measures that would substantially raise the budget deficit, such as a reversal of previously announced wage adjustments, would also put the program off track, jeopardising prospects for multilateral and bilateral international financing,” he warned.

State minister for finance Ahmed Assad confirmed that international funding might be at risk if the salaries were restored in the manner demanded by the Civil Servants Commission (CSC).

“The IMF have been saying that for a while,” Assad said, reiterating that the government was not capable of increasing civil servants salaries this month.

Permanent secretaries of various ministries had been submitting two salary sheets, he said, “so we know the difference.”

Spokesperson of the CSC Mohamed Fahmy Hassan said according to Maldivian law, the finance ministry had to pay the increased salary this month.

”For instance, if give you  work to do and say I will pay you 100rf when the work is done, after you complete the work is it fair for me to say, ‘Oh, I cant give you Rf100, I only have Rf50′,” he asked.

In response Assad said the IMF only gave economic advice, and was indifferent to a country’s law.

During talks between the CSC and finance ministry yesterday no agreements were made beyond a decision to continue negotiations.

In its statement, the IMF warned that “the Maldivian economy continues to face serious challenges. In particular, addressing the very large fiscal deficit is of paramount importance to secure a stable economy, equitable growth, and lasting poverty reduction.’

“A larger fiscal deficit would drive up interest rates, deprive the private sector of the credit it needs, and threaten growth and employment. It may also stoke inflation and erode the purchasing power of all Maldivians, including civil servants. It is to avoid such undesirable outcomes that the fiscal deficit needs to be reduced.”


9 thoughts on “IMF warns restoring salaries will “jeopardise” international financing”

  1. Lets hope IMF doesn't get drawn into controversial domestic politics..

  2. The IMF statement refers to 'public wages' i.e., the total wage bill of all people paid out of the public purse - including parliamentarians from all sides, political appointees of the government, members and staff of independent entities like the Human Rights Commission as well as those of neutral entities like the civil service.

    Given that the civil service employs the most number of people in all these categories and hence accounts for the largest share of the public sector's wages and allowances bill (even after taking into account the fact that many others get higher pay), it is only natural that much of the focus would be on the bill for civil service wages and allowances. However, media reports need to portray factual information without sensationalising issues, especially on such sensitive topics.

  3. hats 0ff to this fahumy... what a faithful servant to civil servants...

    cut down budget for education ,economic development etc and do as fahumy and the civil servants commission wants..

    in other words let us stop our engines running and let our boat float with no direction in the middle of nowhere.

  4. I agree with comments, think deeply before you decide some thing to do with the Civil Cervents.

    you can't just cut off their celeries without any reasonable impact.
    all MDP people are getting hugu mone out of it.

    we know what you all are doing there ..

  5. I agree with Shafeenaz, what IMF said was about public wages and cutting down expenditure, which does not mean only cutting the salary of civil servants.

    I admire Fahmy for standing up for the civil servants, the present government isn't (those who doesn't know the difference from Civil Service Commission & Civil Servants Association means that they are probably not a civil servant). The government should stop appointing political figures who are paid a much higher salary & cut down on over all expenditure. Speaking as a civil servant & a stakeholder in this debacle, we cannot take min. of Finance's word at face value.

    The small public segment who oppose the reinstatement of the CS salary are non-civil people or political people so they don't know how much this effects the civil servants directly.

    Freedom of media does not mean distortion of truth or forgetting ethics & morals. Exaggeration or distortion can create irreparable damage in most cases, especially in present situation.

  6. In the last Presidential elections the public was ready to sacrifice and walk the extra mile with Nasheed for the sake of a better future. To our surprise President Nasheed turned out to be worse than his predecessor. While the world was in an economic recession, the promise of a small bureaucracy was discarded, political appointees skyrocketed and salaries of civil servants were raised in the hope of influencing the Parliamentary elections.

    It is just shameful that countries like Sweden with a population of 9 million can do with only 137 political appointees, Norway - 80 and Finland just 52 while the Maldives with only 300 thousand people have over 700 political appointees and rising.

    The opportunity for a smooth change seems lost now as the public has realised that President Nasheed is not sincere in what he says or does. If Nasheed is unwilling to make any sacrifice by reducing his political appointees how in the world can we expect civil servants be willing to agree to a paycut and making half the present civil service redundant.

  7. Perhaps Sweden, Norway and Finland has reasonable people in their respective parliaments and civil services commissions. Maumoon only promoted his loyalists as civil servants for the last 30 years. These people think they are separate from the government and refuse to coorporate with the new government. What choice does Anni have apart from involving more people he can trust? The country has elected him to deliver promises and civil servants aren't doing it for him.

  8. Aside from the issue of economics, perhaps we need to have more discussion on the concept of independence vs neutrality - the concept of entities like the Monetary Authority and the Human Rights Commission being independent while those like the civil service and the tax authority is neutral. Imagine how interesting it would be to have a tax authority that decides to be 'independent' from the government of the day.


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