Fiscal responsibility bill presented to parliament

A fiscal responsibility bill to impose limits on government spending and ensure public debt sustainability was proposed to parliament yesterday.

Presenting the draft legislation on behalf of the government, MP Ahmed Easa of the ruling Maldivian Democratic Party (MDP) said that a lot of effort was needed to “change the inherited, outdated and indebted economic system.”

“Since 2005, [expenditure] in the annual state budget was out of proportion to income and the budgets had a very high level of debt,” he explained.

As a consequence of issuing treasury bills (T-bills) to finance the budget deficit, Easa continued, banks reduced lending to local businesses in favour of buying government securities, which exacerbated unemployment and slowed growth.

Easa noted that according to the World Bank, a 66 percent increase in salaries and allowances for government employees between 2006 and 2008 was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

“We are seeing the bitter consequences today of spending out of the budget without any control or limit,” he said.

As measures to mandate fiscal responsibility, said Easa, the legislation would set limits on government spending and public debt based on proportion of GDP (Gross Domestic Product).

Borrowing from the central bank or Maldives Monetary Authority (MMA) should not exceed seven percent of the projected revenue for the year, Easa said, while the loan would have to be paid back in a six-month period.

Moreover, a statement outlining the government’s mid-term fiscal policy must be submitted annually to parliament at the end of the financial year in July.


Opposition Dhivehi Rayyithunge Party (DRP) MP Dr Abdulla Mausoom however argued that the purpose of the legislation was to negate controversial amendments brought to the Public Finance Act last year.

Mausoom explained that the passage of the fiscal responsibility bill would abolish article five of the Finance Act amendments bill, which stipulated that the government must seek parliamentary approval before obtaining loans.

According to the amendments voted through by the opposition majority, “any relief, benefit or subsidy provided by the state” would also be subject to parliamentary approval.

The amendments were cited as the main reason for the cabinet resignation on June 29 last year – President Mohamed Nasheed announced at the time that he would veto the bill as the new laws would make it “impossible for the government to function.”

While President Nasheed has since ratified the bill after parliament overrode the veto, the government filed a case at the Supreme Court in December 2010 contesting the constitutionality of some provisions.

The DRP MP for Kelaa meanwhile argued that the fiscal responsibility bill was drafted to “take away all the powers given to local councils [under the Decentralisation Act] and give it back to the Finance Minister and President.”

Mausoom also criticised a provision that would empower the Finance Minister to change cash flow plans proposed to the state budget by independent commissions.

Debt sustainability

Finance Minister Ahmed Inaz informed parliament yesterday that the public debt of the Maldives – excluding government securities – stands at US$637.6 million – including US$446 million outstanding debt inherited from the previous administration.

A UNDP paper on achieving debt sustainability in the Maldives published in December 2010 observed that “as a percentage of GDP, public debt levels have almost doubled from 55 percent in 2004 to an estimated 97 percent in 2010.”

“Public debt service as a percent of government revenues will more than double between 2006 and 2010 from under 15 percent to over 30 percent,” it continued. “The IMF recently classified the country as ‘at high risk’ of debt distress.”

As short-term contributing factors for the country’s “rapid accumulation of public and private debt,” the paper identified the devastating tsunami of December 2004; the cost of the democratisation process that began in the same year; the concurrent global food-fuel-financial crises between 2007 and 2010; and the Maldives’ graduation from a Least Developed Country (LDC) in January 2011.

The UNDP paper noted that the reconstruction effort was largely financed by international donors: “Following the tsunami, ODA [Official Development Assistance] increased sharply from US$72 million in 2004 to US$824 million in 2005. ODA levels remained above US$500 million annually for the next four years,” the paper explains.

However as a consequence of high demand for local expertise by multilateral agencies, “increases in public sector salaries were implemented in order to retain qualified personnel with the government.

“Between 2004 and 2009, the average monthly salary of a government sector worker increased from MRF 3,223 (US$250) to MRF 11, 136 (US$866),” the paper notes.

It adds that the government of former President Maumoon Abdul Gayoom responded to growing calls for democratisation with “a substantial fiscal stimulus programme” of increased government spending, “much of which was not related to post-tsunami reconstruction efforts.”

“This strategy led to a large increase in the number of civil servants from around 26,000 in 2004 to around 34,000 by 2008 or 11 percent of the total population. Thus the government simultaneously increased the number of public sector workers as well as their salaries,” the paper notes.

Consequently, by 2010 recurrent expenditure – wage bill and administrative costs – was projected to exceed 82 percent of total expenditures “while capital expenditures will amount to just 18 percent in the same year.”

Moreover when the impact of the worst global recession in decades struck the Maldives in September 2008, “the Maldivian economy was already in the middle of a severe economic crisis with substantial fiscal and current account deficits, high liquidity growth, double digit inflation, pressure on the fixed exchange rate, increases in public and private sector debt, rising inequalities between the capital and the atolls, and a costly civil service.”

Meanwhile as the ballooning fiscal deficit reached 26 percent of GDP in 2009, tourist arrivals declined ten percent in the first year of the new administration.

However the new government’s efforts to reduce government spending with pay cuts of up to 20 percent and plans to downsize the civil service – which employs a third of the country’s workforce – was met with “a severe political backlash from parliament.”

“In March 2010, the parliament passed a 2010 budget with amendments which increased the government’s proposed budget by 7 percent (or 4.5 percent of GDP),” the paper observed.

“Three quarters of this increase funded a reversal in civil service wage cuts implemented the previous year. Progress on redundancies has also been slower than expected and reforms in this area are unlikely to be completed until the end of 2011 at the earliest. This will have important fiscal consequences.”


Copyright laws presented to parliament

Parliament today voted to proceed with a bill on copy right laws submitted by the ruling Maldivian Democratic Party (MDP).

MPs voted unanimously to send the bill to the economic affairs committee for review.

Introducing the draft legislation, MDP MP Mohamed Thoriq said the proposed copyright laws would create a legal framework to protect intellectual property in the Maldives and thereby “encourage creativity”.

Opposition Dhivehi Rayyithunge Party (DRP) MP Abdulla Mausoom said while the party supported to the bill, it needed some amendments: ”Software protection was not fully provided in the bill,” he said.

A significant proportion of software used in the Maldives, including by government agencies, are pirated copies. Historically this has been due to the both the ready accessibility of unlicensed software and the comparatively high cost of legitimate licenses in the developed world. For example, a copy of a popular accountancy software package that costs Rf25 (US$2) at a shop in Male’ can run to several thousand US dollars if bought legitimately.

As the bill was connected to the productivity of the country, Mausoom added, it was very important to make it as comprehensive as possible.

Maldivian Democratic Party MDP MP Mohamed Mustafa concurred that the bill was important to the Maldives as ”copyright should be protected in the country.”

DRP MP Ahmed Nihan said that the bill was necessary but noted that ”there are amendments that should be brought to the bill.”

Nihan said that there were people who had become mid-level businessmen by selling the pirate copies of softwares and other products.

‘There are fake iPhones, blackberries and other types of mobile phone sold in the market,” he said. ”This business of fake models and products should be prevented.”


Islanders will “regret it” if DRP wins council elections, says MDP

Secretary General for the Maldivian Democratic Party(MDP) Hussein Shah said that if the Dhivehi Rayyithunge Party (DRP) wins the upcoming island and atoll council election, “islanders will regret it.”

Shah accused the DRP of not wanting to “bring powers close to the people”.

”They wish everyone to be crowded in Male,” Shah said. ”Their purpose is to try and stop the government from fulfilling its pledges.”

He said the party was trying to make people understand how things would be like if DRP won the election.

”In parliamentary elections we did not win the majority,” he said. ”Now people can witness the DRP MPs trying to [sabotage] the beneficial bills sent by the government.”

DRP MP Abdulla Mausoom said people had “no confidence” in the current government “as they have feel that it is a dictatorship.”

Mausoom said that people knew now that “nobody in the MDP thinks about the nation and its people.”

”In all the islands of the country we see people against MDP,” he said. ”It’s up for them to make a good decision.”

Press Secretary for the President Mohamed Zuhair said that a loss to DRP in the island and atoll council election would mean the government “will not be able to do anything for the people.”

Zuhair said after the council election there will be a direct link between the government and the islanders.

”Look at the parliament now – the situation is worse there than in countries that have civil wars,” he said.

He said the supposed date to hold the elections had now passed.

DRP Deputy Leader Umar Naseer claimed that the government had proved it could not run the country.

”Eighteen months have passed and they haven’t done anything,” Umar said. ”DRP would try to do everything it can to develop the islands.”

”Nothing will happen if MDP wins, ” he said. ”Things will be just same as they are.”


Parliament passes bill on broadcasting corporation

The parliament yesterday passed a bill establishing a broadcasting corporation, with board members to be appointed by parliament and responsible for controlling public media TVM and Voice of Maldives.

The bill effectively gives legal weight and parliamentary backing to the Maldives National Broadcasting Corporation (MNBC), which already runs state media.

Out of 69 MPs present, 42 voted to pass the bill. The bill was presented to the parliament by the government, with MPs attempting to introduce 35, but during the vote only 18 amendments were passed.

Spokesperson for the Maldivian Democratic Party (MDP) Parliamentary group Mohamed Shifaz said he was happy with the broadcasting bill but was unhappy on how the broadcasting corporation bill was passed.

Shifaz said that according to the bill the board members would be appointed by the parliament.

”The parliament will be appointing people for the board,” Shifaz said. “Parliament will do the interviewing and select people.”

Dhivehi Rayyithunge Party (DRP) MP Ahmed Mahloof said he was “very happy” with the bill, suggesting consternation within the MDP over the appointment of board members was “because TVM is the only media now which promotes the government.”

Mahloof said the MDP MPs were worried that if TVM became independent, “there will be no one to promote the MDP.”

”TVM would never report anything negative to the governemnt,” he said. ”It always promotes the government, that’s why they are worried that TVM might become independent when the parliament appoints board members for the broadcasting corporation.”

He said if the bill was approved by the president, media in the Maldives would become “free and independent.”

MDP MP Ahmed Easa said that appointing the board members by the parliament, announcing for interested applicants for the position and interviewing the applicants by the parliament made the parliament “a place where business is done.”

Easa said that the opposition MPs passed the bill because “they want to change the public media the way they want to.”

”It is fine if the parliament monitors the board,” he said, ”but if they are appointing people for the board that means the parliament is [participating in] the country’s business community.”

DRP MP Abdulla Mausoom said the bill was passed with majority support of MPs.

Mausoom said the President Mohamed Nasheed should “be very happy” with the way the bill was passed claiming that many people blamed the government for attempting to control the media.

”Now the president can say he has no power over the media,” Mausoom said.


‘Words and weapons’ bill presented to parliament

A bill banning threats, use of sharp objects and weapons was been presented by the government to the parliament yesterday, in a bid to reduce violent crime on the streets of Male’.

If the bill is passed, threatening a person will become a crime and will result in a 2-12 months sentence. If someone uses a sharp object or dangerous weapon in a threatening manner, there would be an additional 1-6 months sentence.

The bill says that using or storing a sharp object or dangerous weapon in public is also a crime, which will receive a 2-12 months sentence. Furthermore, importing butterfly knives and flick knives without the permission from the Home Ministry would also become a crime, and receive a 1-3 month sentence.

Maldivian Democratic Party (MDP) MP Mohamed ‘Colonel’ Nasheed introduced the bill to the MPs, which was forwarded to debate through the support of Dhivehi Rayyithunge Party (DRP) MP Ali Waheed.

Spokesperson for MDP parliamentary group MP Ahmed Shifaz said that the bill was mainly focused on reducing gang fighting to make the society “a peaceful and safe place.”

”Right now police cannot arrest somebody walking around with a knife in their hand,” Shifaz said. ”But after this bill is passed, people will  not be allowed to use sharp objects and weapons in public.”

He said anything that could be used to injure a person would be designated as a weapon, including logs and batons.

‘Threatening a person with weapons or words would also be a crime under the bill,” he said, ”and even if a police officer threatens a person, that officer can be charged.”

He said the bill would help to reduce crime rate in the country.

DRP MP Abdulla Mausoom said it was very difficult to comment on the bill as it was still in the debate stage.

”Everyone wants to stop crime in the country,” Mausoom said. ”The crime rate has risen in the capital Male’ and big islands of the country.”

Mausoom said anybody who used ‘weapons’ should not be arrested, as they were used for many purposes.

”For instance, people living in the islands – in the early morning they are out working with their axes, knives and other sharp objects,” he said.

He said the most effective solution for rising crime was to have community participation.

Press Secretary for the President Mohamed Zuhair said the bill would help to avoid crimes in many ways.

”The bill will provide a wide range of powers to police to remove the offender,” Zuhair said.

Zuhair said everyone with a knife would not be deemed a criminal, but ”all criminals are now armed with a knife.”

He said the bill was rather an effective ban on threatening a person’s well being.


Police patrols now pedal powered

The Maldives Police Service (MPS) will begin using bicycles to conduct patrols, unveiling the new fleet yesterday on the 77th anniversary of the service.

The new bicycles were given a test run on the streets of Male’ during the inaugural ceremony by President Mohamed Nasheed, First Lady Laila Ali, Vice President Mohamed Waheed and Commissioner of Police Mohamed Faseeh.

Police Sub Inspector Ahmed Shiyam said the police bicycles would commence patrolling with the other police vehicles 24 hours a day.

”It is a new method of police patrol, like foot patrol,” Shiyam said.

Press Secretary for the President Mohamed Zuhair said that the new police bicycles would ease congestion on the streets and make it easier for police to patrol.

However, Dhivehi Rayyithunge Party (DRP) MP and former minister for environment, energy and water Abdulla Mausoom said the new initiative proved the Maldives was “going backwards day by day.”

“This will make it easy for people to attack police,” he said, noting that Male’ was a “risky environment” and there had been an attacks on police last year.

The Maldives ”does not have to go back to the stone age to be a carbon neutral country,” he said.

Zuhair said the DRP were stuck in the past “and do not understand the new political environment.”

As well as a gesture towards the country’s ambitions to become carbon neutral by 2020, the government hopes the sight of police riding bicycles on the streets will set a precedent and inspire others to follow.


HRCM gathering government institutions and political parties for human rights forum

Human Rights Commission of the Maldives (HRCM) has called on the president, independent institutions and all the political parties to come together and discuss issues around human rights in the Maldives and express their ideas.

President of HRCM Ahmed Saleem said the commission had sent letters to President Mohamed Nasheed, Speaker of Parliament Abdulla Shahid, Attorney General Husnu Suood and to representatives of all the political parties.

”We want to hear the voice of political parties and government institutions,” he said.

He said the commission intended to draft a report on human rights in the country and visit the atolls after meeting with government institutions and political parties.

”We advise everyone in connection with human rights including the media to cooperate with us,” he said.

Press Secretary of the President Mohamed Zuhair said the president had not decided whether he would attend, but that he would undoubtedly support the assembly.

Secretary General of the Dhivehi Rayyithunge Party (DRP) Abdulla Mausoom said the party would decide to what to do after discussing it.

He said he do not believe a survey of human rights was necessary, “as for instance is there any use to a survey to find out whether people like to eat?”

He claimed the government had abused the rights of freedom of opinion by threatening private media.

Recently inducted Maldivian Democratic Party (MDP) MP Alhan Fahmy said the party would support the gathering, noting that while human rights in the Maldives was progressing day by day, ” there are things to be corrected.”