Deputy Speaker Ahmed Nazim to join PPM “very soon”

People’s Alliance (PA) MP and Parliament Deputy Speaker Ahmed Nazim has revealed he intends to join Progressive Party of Maldives (PPM).

Nazim told local media that despite being PA’s parliamentary group leader, he had always worked closely with the PPM since the party’s inception in October 2011.

PA’s former president, Abdulla Yameen, was elected as PPM’s presidential candidate on Saturday (March 30) ahead of the  2013 presidential elections in September.

“PA was formed for a specific purpose wasn’t it? It was formed for the political future of Yameen as he wanted out of the DRP [Dhivehi Rayyithunge Party] at the time,” Nazim told local newspaper Haveeru.

“So when Yameen chose to further his political career through PPM the result is very clear isn’t it? However, my switch to DRP had to be put off as the political party bill was still in the parliament,” he explained.

PPM is the second largest party in the Maldives with a total of 22,765 members, according to February’s figures. The party is led by former autocratic ruler of the Maldives and half-brother of Yameen, Maumoon Abdul Gayoom.

In regards to the PA, Nazim stated that future progress of the Maldives lies with the functioning of larger parties, hence why he voted in favour of the Political Parties Act to dissolve parties with less than 10,000 members.

The Political Parties Act, ratified by President Mohamed Waheed Hassan Manik on March 12, saw a total of 11 parties removed from the Election Commission’s political parties register – including the PA.

Out of the 16 parties that had existed prior to the bill’s ratification, only the Maldivian Democratic Party (MDP), PPM, Dhivehi Rayyithunge Party, Jumhoree Party and Adhaalath Party remain registered in the Maldives.

“It doesn’t mean we shouldn’t listen to smaller parties. But if so there is a fear that it would lead to a tribal system in the Maldives,” Nazim told local media.

“If we start giving every party a seat in the cabinet and companies, the whole thing will function without a proper system. We can see that from the coalitions we’ve formed so far,” he added.

According to local media, PPM will have secured a total of 19 seats in parliament should Nazim sign to the party.

Although Nazim did not give an exact date for the switch, he told Haveeru that it would take place “very soon”.

Deputy Speaker Ahmed Nazim was not responding to calls from Minivan News at time of press.


PG asks High Court to void dismissal of Deputy Speaker Nazim’s corruption cases

The Prosecutor General (PG’s) Office today requested that the High Court void a previous Criminal Court dismissal of four corruption cases against People’s Alliance (PA) MP and Deputy Speaker of Parliament Ahmed Nazim.

Nazim had been cleared by the Criminal Court of all four corruption charges against him on February 23, 2012. The decision was taken 16 days after the controversial transfer of power on February 7, with the court ruling that Nazim’s “acts were not enough to criminalize him.”

All four cases concerned public procurement tenders of the former Atolls Ministry, which were alleged to have been secured through fraudulent documents and paper companies.

The state prosecutor during today’s hearing claimed that the Criminal Court had acted in contradiction to the procedures normally applied in criminal cases.

The prosecutor also alleged that in passing the ruling to dismiss the cases, the Criminal Court had failed to consider any of the evidence provided by the state.

During today’s appeal hearing, the PG’s Office stated that the dismissal of the cases had breached the constitutional decree of equal treatment to all citizens. Concerns were also raised that the Criminal Court had acted against the norms of procedure in similar cases by ruling that two counts of fraud cases against Nazim could not be prosecuted.

Considering these grounds, the state asked the High Court to rule void the Criminal Court’s dismissal of the four cases, and to order the court to rule on the cases anew.

Nazim dismissed the state’s allegations in court today, local media reported. Speaking on his behalf, his lawyer alleged that the state’s appeal case was “based around a lie”.

Nazim’s lawyer responded to the state’s allegation that the Criminal Court had not followed procedures by claiming that the court had presented the state with an opportunity to present their case during hearings.

The defendant’s lawyer also alleged that the witnesses named by the state had not been presented in court as they were not believed to be fair or impartial witnesses.

Last month, Nazim slammed PG Ahmed Muizzu in parliament, stating that he had failed to either come to a decision on or forward to court some 72 percent of cases submitted to his office by the Maldives Anti-Corruption Commission (ACC).

The criticisms levelled by Nazim were dismissed at the time by the PG himself, who said that the claims were inaccurate.

PG Ahmed Muizzu and MP Ahmed Nazim were not responding to calls at the time of press.


Finance Committee debates prompt investigation of government finances

The Majlis Finance Committee has decided to table the issue of the alleged embezzlement of MVR24million ($US1.5million) by the Disaster Management Centre (DMC) as an emergency issue tomorrow, local media has reported.

Following the release of the Auditor General’s report on the DMC’s 2010 finance, released last week, there have reportedly been two arrests in relation to the case.

Head of the committee Ahmed Nazim called into question the government’s accounting system, as did the Auditor General, Niyaz Ibrahim, who criticised those in charge at the DMC.

Ibrahim has also decided to expedite the audit of the government’s finances after being questioned in the Finance Committee about an allegedly unauthorised MVR300million ($US19.4million) loan, taken by the government from the Bank of Maldives in June.

That is an assignment we had planned for this year. But after the MPs raised questions over the matter, we have sped up that process and the assignment has commenced and is ongoing. This exercise is intended to carry out a comprehensive public debt audit of the State,” Haveeru quoted Ibrahim as saying.

He said that the audit will cover five years of spending and admitted that it was his office’s responsibility to determine legality of state debt.

“Based on the ratios, it is the responsibility of the Auditor General to determine the vulnerability of the State. If you look at the practice of the rest of the world public debt audits will cover such issues,” Niyaz added.

“Debt is a highly sensitive issue. It is related to the sustainability of the State. In addition to determining the authenticity, there are some vulnerability ratios we look for in a public debt audit,” reported Haveeru.


Government’s Rf 300million BML loan to be investigated in Majlis

Maldivian Democratic Party (MDP) MP Ahmed Sameer has proposed that the Parliament take action against the government after it allegedly obtained a Rf 300 million (US$20 million) loan from the Bank of Maldives (BML) without consulting the legislature, local media has reported.

Sameer claims that the government had misled people by claiming it had sought parliamentary approval prior to obtaining the loan.

The issue of the loan was first discussed in the Majlis’ Finance Committee on June 25. After deliberating on the necessity for parliamentary approval for the loan, the committee opted to send the issue to the Counsellor General for clarification.

Kulhudufushi MP and Finance Committee member Abdul Ghafoor Moosa told Minivan News at the time that the loan could not be granted as it was not part of the state budget.

Moosa today said that the Counsellor General agreed with this opinion.

“The Counsellor General has said it should be approved by the full house. The government giving irresponsible reasons for its actions,” said Moosa.

Ahmed Nazim, head of the committee, was reported in Sun Online on June 25 as having told his committee that President Mohamed Waheed Hassan had sent the Majlis a letter on June 13 seeking permission to obtain the loan.

Two days after, however, Minister of Finance and Treasury Abdullah Jihad told the same news source that the loan had been issued in May at a time when parliament had been in recess.

“The loan had to be obtained urgently. The Parliament was in recess at the time, so we took the loan and sent the issue to the Parliament,” Jihad told Sun.

Moosa informed Minivan News that the Financial Committee did not go into recess, having business to deal with all year round.

Jihad told Sun that this type of budget support loan was accepted in the original budget and so he anticipated no legal issues with the move.

Jihad was not responding to phone calls at the time of press.

The Rf300 million budget support loan was intended to replace a $65million foreign loan that had been approved in the original 2012 budget.

Moosa claimed in June that the Rf300 million loan would be taken on a commercial basis, with high interest rates that would require the government to pay back Rf384million.

He said that the $65million loan, delayed due to incorrect paperwork, would have only been taxed at rates of around 2 percent.

Using these figures, the interest paid on the original loan would be Rf20million (US$1.3 million), whilst the interest on the new loan would be Rf84million (US$5.4million).

This year’s budget deficit is estimated to surpass Rf9 billion (US$584million) , around 27 percent of GDP

President’s Office Spokesperson Abbas Adil Riza said that the figure given by Moosa was incorrect, adding that the government was “not going to lose money on the deal”.

Abbas explained that Abdullah Jihad and other members of the current Finance Ministry had advised the government to take out the new loan as part of a “mop up” operation.


BML loan under Majlis scrutiny already issued says Finance Minister

Minister of Finance and Treasury Abdulla Jihad today told local media that an Rf300million government loan from the Bank of Maldives (BML) had already been issued, despite questions having been raised over whether the deal needed the Majlis’s approval.

After meeting to discuss the issue on Monday, the Majlis’s Finance Committee elected to pass the matter on to the Counsel General.

Committee member Abdul Ghafoor Moosa told Minivan News “We cannot grant it as it was not in the state budget.”

The loan was said to be a rufiyaa denominated replacement for a US$65million loan which had been approved in the original 2012 state budget.

Jihad told Haveeru that the deal had been rushed through the Finance Committee in May and June, when parliament was in recess.

“I believe that the loan had been sanctioned when the budget was approved,” Jihad told Haveeru.

The Finance Committee’s meetings continue even when the rest of the parliament is in recess.

The reason given for the BML budget support loan was that it was part of a “mop-up” operation intended to help curb inflation, although former Finance Minister Ahmed Inaz doutbed the efficacy of such a policy.


PG’s Office to send Nazim fraud cases to the High Court

The Prosecutor General’s (PG) Office has appealed cases concerning the alleged involvement of Deputy Speaker Ahmed Nazim in defrauding the Atolls Development Ministry to the High Court, reports Haveeru.

The case, which was dismissed by the Criminal Court in February, involves a 2004 deal to purchase harbour lights worth Rf1.95 million (US$126,000) on behalf of the now defunct ministry.

The PG’s office has told Haveeru that it intends to appeal a further four cases previously brought against Nazim.

The judge at the time of the dismissals concluded that Nazim’s “acts were not enough to criminalise” him legally.

If Nazim had been found guilty, he would have been ordered to pay a total sum of Rf5,315,618 (US$345,170) paid by the state for the projects and sentenced to between one to six years imprisonment.

Under provision 131 of the penal code, an extra month will be added to the jail sentence for every additional Rf1,000 (US$65)  if the fraudulent transaction exceeds Rf100,000 (US$6,493) .

In an interview with local media outlet Sun following the rulings, Nazim claimed the four cases were baseless and had been leveled at him by former President Mohamed Nasheed’s administration, using false evidence.

“Today we are guaranteed of the existence of an independent and trustworthy judiciary. Former President Nasheed and the MDP will now believe we have an independent judiciary, because they know that the four cases were schemed with manufactured evidence. These are are absolutely untrue and baseless cases,” he said.


IMF predicts dire consequences if deficit reduction fails

The IMF yesterday warned the People’s Majlis that if the country does not reduce its expenditure, it risks running out of reserves and miring the country in poverty.

“The expenditure has not been under control since 2009. It has been rising, and we have been [issuing] warnings since then,” Haveeru reported the Chief of the IMF mission in the Maldives, Jonathan Dunn, as telling parliament.

Previously highlighting “significant policy slippages”, in particular the government’s failure to curtail spending, the IMF felt it necessary to delay the third tranche of funding in 2010. Nasheed’s government contended that it had tried to impose austerity measures, in particular pay cuts for civil servants, but had been blocked by the Civil Service Commission (CSC) and then-opposition majority parliament for political reasons.

Dunn recommended against printing money or obtaining loans from other countries, given the current economic frailty of the Maldives.

His suggestions for expenditure reduction included revising civil servants’ salaries and allowances, increasing the Goods and Services Tax (GST) from 6 percent to 15 percent, re-introducing import duties, and increasing bed tax by 50 percent, from US$8 to $12.

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.”

Originally, it was foreseen that the shortfall from import duties was to be covered by Rf2 billion in tourism goods and services tax (T-GST) and Rf 1 billion as general goods and services tax (GST) revenue.

The IMF representative also noted that budget figures they studied did not represent the change in the way lease extensions for resorts were now being received.

The new government recently revised the policy on lease extension payments for resort islands, making the sums payable in instalments rather than lump sums. Former Tourism Minister Mariyam Zulfa has argued that this policy is largely responsible for the current budget deficit, instantly creating a US$135 million hole in the budget for the short-term financial benefit of several influential Maldivian resort owners.

Detailed national income statistics are now published monthly by the Maldives Inland Revenue Authority (MIRA). Total revenue collected in March was Rf 648.7 million (US$42.1 million), more than triple the amount received in March 2010.

However, “revenue received [in March 2012] is 37.9 percent lower than the projected revenue, mainly due to the unrealised revenue from Lease Period Extension,” MIRA observed.

Total revenue collected during the first quarter of 2012 represents a 113.9 percent increase on the same period last year. Half of the revenue collected during this period was attributable to the Business Profit Tax (BPT) and GST, introduced during Nasheed’s government.

Head of the Majlis’s Financial Committee, Deputy Speaker and People’s Alliance (PA) MP Ahmed Nazim, met with the IMF last week and said their main concern was that the 2012 budget “may not be realised.”

“The IMF feels there is a big hole in the forecast revenue,” said Nazim.

He also felt the investigation of the expenditure on the Aasandha health insurance scheme to be relevant, as it represents more than 10 percent of the budget.

Although he described the scheme’s future as assured, he expressed grave concerns over the sustainability of the scheme as currently practiced.

“It is a hole in the pocket of the government. It seems odd that half of the population has used it, there is no epidemic, and yet it has used Rf 3 million (US$195,000) a day on medicine,” said Nazim.

Nazim also mentioned the shortfall of over Rf 500 million from the failure to privatise  Maldives Post Ltd, Island Aviation and Maldives In-flight catering.

Tourism Revenues

Due to the country’s reliance on imports, the waning of reserves was described as very dangerous, with the IMF comparing the situation with that of the Seychelles in 2008.

The Seychelles secured a US$26 million Stand-By Arrangement from the IMF after a balance of payments crisis saw the country default on international loans. In exchange, the Seychelles, whose economy also relies heavily on tourism, undertook stringent cuts, including shedding 12.5% of the government workforce.

The Seychelles crisis was partly attributed to a fall in the tourism trade damaging the country’s finances. Concerns have been raised regarding the effect of the current political crisis on the current Maldives’ government, with some figures suggesting numbers were down as a result.

Dunn anticipated that the tourism figures were likely to affect the amount of the GST that would be received, which he argued could not replace the income forfeited by suspending many import duties. Both measures were introduced with cross party support at the start of the year under the previous government.

The Maldives Association of Tourism Industry (MATI) had previously warned that the industry stands to lose as much as US$100 million in the next six months due to widespread media coverage of the country’s political unrest.

More recently, however, the Tourism Ministry declared its confidence that this year’s arrivals will break all previous records. Maldives Association of Travel and Tour Operators (MATATO) yesterday revealed plans to specifically target certain markets with specially assigned staff members to help achieve those aims.

Deputy Minister of Tourism Mohamed Maleeh Jamaal said that the Tourism Ministry did not forecast that the decline would continue.

“The Chinese market is improving. Our [predictions] do not show that the Chinese market will decline to the extent the IMF has said, and we had a positive growth in the last three months,” he said.

Concluding his presentation, Dunn pressed home the harsh reality of the economic climate.

“These are tough steps to take. It requires your [MPs’] cooperation. It is your responsibility as well. This is necessary for the nation. Immediate steps have to be taken. This is the reality, we have to face it.”


Male’ bus service bids open to four groups

MVK Maldives, Shiyam Auto Garage, AK Construction and MVK’s Ahmed Nazim have shown interest in providing bus service to Male’, the city council has announced.

City Council will accept bids for the project today, December 15, from the four groups exclusively, Haveeru reports. The parties are required to present a Rf500,000 (US$33,300) guarantee at the time of bidding.

The council will evaluate bids according to the parties’ demonstration of Corporate Social Responsibility (CSR) and its commitment to renewable energy.

Previously, Male’ bus service was operated by MVK Maldives for a trial period. The agreement covering the trial service expired this month.

MVK has been requested to continue service until a party is selected and an agreement reached.


President claims tax reforms key to addressing national rich-poor divide

President Mohamed Nasheed has claimed tax reforms submitted to parliament last week will let the government bridge the gap between rich and poor in the Maldives, by boosting state income and funding government services.

Speaking yesterday during his weekly radio address, Nasheed referred to a household income and expenditure survey for 2009-2010 he claimed indicated that while 10 percent of the population were spending on average just Rf12 a day, the wealthiest 10 percent had daily outgoings of Rf230.

At present, the president said that four tax bills were awaiting approval in parliament in the form of a Goods and Service Tax Bill, Business Profit Tax Bill, Income Tax Bill and an Amendment Bill to Tax Administration Act that were key parts of trying to provide more equality between the country’s rich and poor.

The government’s proposals to try and boost direct revenue through additional taxation have been met with caution and concern by business groups that fear the president could harm business with economic reforms that needed a gradual introduction. Opposition parliamentarians from parties like the Dhivehi Rayyithunge Party (DRP) and the People’s Alliance (PA) have hit out at the government’s taxation policies claiming they were serving only to stifle development that was needed to boost national income.

According to Nasheed, the proposed legislation relates to replacing current systems of indirect tax such as import duties that affect richer and poorer citizens equally with a system that puts more emphasis on the country’s highest earners.  “[This will change the current] indirect tax on the value of goods to a tax payable by the wealthy, based on the profit of their businesses,” the president stated.

If the government is able to succeed in boosting direct income, measures such as the tax reform would be put into social security and protection measures, the president said.

Nasheed claimed that survey also indicated increased quality of living standards for Maldivians.  The number of people living below the poverty line – defined as earning under Rf23 a day – fell by about 50 percent from figures conducted seven years ago, according to the report.

Despite Nasheed’s optimism, DRP leader Ahmed Thasmeen Ali said last month that the country’s economic reforms – such as plans to devalue the rufiya – would remain a key concern for the DRP during the current parliamentary sitting.

“The government has indicated that it will release proposals to address economic concerns and bring down the dollar rate,” he said. “We do accept the fact that revenue has to be increased, but we would like to see serious attempts to reduce state expenditure and ensure revenue is not being wasted.”

The DRP leader claimed that the party was not specifically calling on the government to slash spending in a single area such as political appointees, but instead asking for a consensus on areas such as in the funding of new offices for local councils formed during local elections held in February.

Similarly, Ahmed Nazim, a PA MP and a member of the Majlis’ Public Finance Committee, said that he believed current government policy was ultimately stifling economic development, with administrative costs within the civil service identified as a notable problem.

“We have small percentage [of funds] to invest in the economy. We cannot move finances to a higher level though as the government doesn’t have the right policies to do this,” he claimed. “For instance, we need to reduce the number of [inhabited] islands by linking them and cutting the overall number of cost centres required for decentralisation.

The comments were made as the IMF claimed that the Maldives economy remained “unsustainable” even after cuts made to the annual 2011 budget, as it concluded its Article IV consultation earlier during the year.

Outside of the Majlis’ floor, business organisations like the Maldives National Chamber of Commerce and Industry (MNCCI) have claimed that further investment was needed to strengthen the business sector before taking on widespread economic and taxation reforms.

MNCCI Treasurer Ahmed Adheeb Abdul Gafoor told Minivan News early last month that he believed that with the planned introduction of the additional GST on general trade and corporate tax, the prospect of policies like a minimum wage would need to be studied in terms of possible impact, particularly in the private sector.

“Introducing these tax reforms and schemes like the minimum wage will be difficult over the next two years. The Maldives is at a disadvantage when it comes to economies of scale as it is,” he said. “What I would like to see is a transitional period rather than introducing these measures straight away.”

Adheeb claimed the government needed more consultation with employers – especially in smaller and medium enterprises – before putting any initiatives like a minimum wage in place, adding that private enterprises had been a key component in the more successful developments of the Maldivian economy.

“We [the private sector] could end up losing some of our competitive edge over other countries. What we need is some breathing space and for these reforms to be bought in gradually,” he said. “We have to build confidence in the economy especially with small and medium businesses. If the minimum wage is going to be introduced it should be set on an economic basis and not for short-term political benefit.”

While sharing the MNCCI’s caution, Mohamed Ali Janah, President of the Maldives Association of Construction Industry (MACI), said this month that he believed that Maldivian businesses should not feel threatened by a shift towards a liberalised economy despite significant changes proposed to tax and regulation.

Janah claimed that government-proposed economic reforms were no different t changes that had already occurred across the western world and parts of South Asia.

Although welcoming market liberalisation in general, the MACI president said he believed that industry would still likely require more time to adapt to the transitions such as a minimum wage and greater taxation on goods and services.

“We are in something of a transition period right now, but what we want businessmen to understand is that they should not feel threatened [by these changes],” he said. “We are being pushed towards a more liberal economic system where we will need more accountability and transparency.”

Janah claimed the proposed changes reflected a potential move away from the style of family-dominated business dealings that he suggested may in some cases be less likely to aim for transparency and detailed accounting.