Committee recommends 7 per cent increase to budget

The parliamentary committee selected to review the Rf11.9 billion ($US926 million) mid-term budget for 2010 has recommended increasing its size by seven per cent to Rf12.6 billion ($US1 billion)

Presenting the committee report last night Dhiggaru MP Ahmed Nazim, chairman of the 15-member ad hoc committee, said its tasks were divided to focus on government revenue, expenditure, the public sector investment programme (PSIP), civil servants’ pay and budgets of independent institutions.

“The policy followed by the budget committee was that the government has submitted the budget the way that they want, so we do not want to make any changes to the budgets of any government institutions,” he said. “The reason is because the government should have the right to govern in accordance with their policies.”

Independent institutions

But, he added, in their meetings the committee learned that independent institutions did not believe they had “any financial independence” as they required approval for expenditure from the finance ministry.

Furthermore, the committee was informed that the funds allocated in the budget would not be enough to pay wages for the employees of independent institutions next year.

“When they are summoned to Majlis for not fulfilling their legal responsibilities, they will say you didn’t even give us a budget,” he said.

The committee therefore recommended an increase of Rf166 million (US$13 million) for the budgets of independent institutions, with Rf142million  (US$11 million) of it to be spent on salaries and allowances.

Of the Rf166 million, he said, Rf105 million (US$8 million) will go to the judiciary and the committee recommended allocating Rf15 million (US$1.6 million) from the PSIP budget to build a judicial complex for the department of judicial administration.

Civil servants

The committee further recommended an injection of Rf617.6 million (US$48 million) to the budget to restore civil servants’ salaries to their former levels.

In its negotiations with the Civil Service Commission before pay cuts were enforced in October, the government agreed to restore salaries once its revenue exceeded Rf7 billion (US$545 million).

Nazim said the finance ministry informed the committee that revenue will reach Rf7.3 billion next year.

Of the total government expenditure, 70 per cent was recurrent expenditure and 46 per cent was expenditure on salaries for employees.

“The ministry of finance and treasury revealed that salaries for state employees were not budgeted based on the number of state employees,” he said. “They said the finance ministry does not yet know the correct number of state employees. The reason is that an accurate database containing accurate information of employees receiving salaries from the government has not been established.”


“The members decided that they support the privatisation policy, but the committee believes the government has not pursued it in the best way,” he said, adding MPs criticised the sale of the majority stake in Dhiraagu, the government telecommunication company.

While committee members expressed doubt that revenue could be generated from taxation as the necessary legislation had not been passed, Nazim said the committee recommended expediting the passage of legislation on levying GST (goods and services tax) on the tourism industry.

The government proposed a bill on GST to parliament last week.

But, the report states, MPs felt Rf300 million (US$23 million) in revenue from taxing corporate profits was unlikely to materialise in 2010 as administrative matters had to be worked out after the bills were passed.

The third and final readings of the corporate tax bill and tax administration bill has been tabled in the agenda for 28 December.


Nazim said the committee noted that expenditure on payment of loans was higher than previous years as a schedule had been formulated to repay government debt.

While Rf113 million (US$9 million) was allocated for reducing the cost of goods and services, he said, details of this item was not provided.

The committee took note of a significant decline in expenditure on education and health, said Nazim, with a decrease of Rf400 million (US$31 million) and Rf700 million (US$54 million) respectively.

Moreover, the funds designated for economic development projects was only 7.9 per cent of the total budget.

The committee recommended the inclusion of Rf50 million for fishermen and Rf4 million for private media as subsidies in the budget.

If the committee’s recommendations are passed, over Rf800 million will be added to the budget.

Among a further 17 recommendations by the committee were requiring the government to submit a report to parliament in June containing details of the projects to be carried out under PSIP.

Moreover, the government should submit details of its public private partnership (PPP) projects every six months.

Following voting on the amendments recommended by the committee and proposed by MPs during the final debate, the budget will be put for a vote tonight.