President appoints finance minister as acting tourism minister

President Mohamed Nasheed has appointed Finance Minister Ali Hashim as the acting tourism minister.

Former Tourism Minister Dr Ahmed Ali Sawad was appointed Attorney General when former Attorney General Husnu Suood resigned, claiming his job was untenable because of parliamentary obstruction. The appointment is awaiting approval of parliament.

President Nasheed has said he will appoint a new tourism minister shortly.


Finance ministry snubs parliamentary committee

Finance Minister Ali Hashim failed to appear before parliament’s internal affairs committee today, after he was called to clarify the manner in which independent institutions in the Maldives are funded.

Hashim was asked to appear after institutions including the Anti-Corruption Commission (ACC), the Human Rights Commission of the Maldives (HRCM), the Election Commission (EC) and the Prosecutor General’s Office (PGO) complained to parliament that they lacked financial independence and must “beg” for funds from the Finance Ministry.

“He left the country,” said independent MP Mohamed Nasheed, the committee’s chair. “He said he was preoccupied during the first time we set, so we sent him a formal letter rescheduling the meeting for this morning at 11:15am. He didn’t respond and we learned he had left the country.”

Nasheed said the committee had instead asked the State Finance Minister Ahmed Assad to appear, “but he said he was in another meeting. I said he should give this one priority, so he sent two junior officers.”

Nasheed said the committee had decided to invoke article 99 of the constitution and force Hashim to attend the next committee meeting after 9 January. That article allows: “the People’s Majlis or any of its committees the power to summon any person to appear before it to give evidence under oath, or produce documents.”

“If he doesn’t appear, we’ll make a report to parliament questioning his confidence,” Nasheed warned. “He’s being irresponsible and it’s so unnecessary and uncalled for.”

Hashim was unavailable when Minivan News attempted to contact him.

A question of independence

Independent institutions are currently required to seek approval from the Finance Ministry for all funding, a situation they argue undermines their ability to function independently of the executive.

“It is actually a problem,” explained Deputy Prosecutor General Hussain Shameem. “We haven’t had financial independence and we have to seek approval from the finance ministry to run programs. The money has already been budgeted and there is no need for us to be overseen by the finance ministry.”

During a meeting between the parliamentary committee and the heads of independent institutions, HRCM President Ahmed Saleem complained that the process undermined the commission’s integrity by leaving it unable to pay bills on time.

“We just got the money yesterday to pay for an invoice received two to three months ago,” he said. “This undermines our credibility.”

Saleem noted that while the PGO had yet to have a request for its money denied, the EC had not been so lucky.

“97 per cent of the finances we had allocated for training this year are still untouched and it is already December,” complained Mohamed Farooq from the EC.

“We don’t get any finance for our programs unless the Finance Ministry approves it. They are the ones who decide if we should conduct training programs.”

The prosecutor general, HRCM, EC and ACC “are all reading from the same script on this issue,” Nasheed said.

“Even when their budgets have been approved they still have to ask for permission, because the money is not physically transferred to a separate account.”

Furthermore, he said, the ministry’s decision to reduce the salaries of staff in independent institutions by 15 to 20 per cent “was made in violation of the laws used to create those institutions.”

The finance minister had previously suggested a percentage of the institution’s budgets might be made available, “but that still doesn’t solve the issue,” Nasheed argued.

“They see this as encroaching on their independence. If there is less money available then the budgets of these institutions should be subject to quarterly review and adjusted by parliament.”


Budget falls short of development pledges: DRP

The Dhivehi Rayyithunge Party (DRP) has expressed regret over the proposed 2010 mid-term budget, which it argues will fail to deliver on the development pledges of the incumbent government.

The largest opposition party said the budget had a deficit of Rf4.7 billion (US$366 million), noting that while Rf7.2 billion (US$560 million) is expected in revenue, this was accounted for 60 per cent of the budget.

“It is further doubtful that the revenue goals could be reached since a large part of the income rests upon taxes to be levied under laws that would be made in the future,” a statement from the party said.

Addressing MPs last week, Finance Minister Ali Hashim said the government had proposed a number of measures to generate around US$354 million to plug the deficit. These included foreign aid, foreign loan assistance, privatisation of government companies and the sale of treasury bills through the Maldives Monetary Authority.

In their statement, the DRP further noted that Hashim said government revenue depended on three new taxes, legislation for which was currently pending in parliament.

But, the party continued, the Rf3.4 billion (US$265 million) expected in tax revenue in next year’s budget was only three per cent higher than tax revenue in 2008.

Last week, Hashim urged MPs to pass the taxation legislation before the end of the year and said a goods and services tax would be imposed on tourist resorts and hotels in the final quarter of 2010, which he anticipated would raise Rf358 million (US$27 million) in revenue.


The party further noted that at Rf333 million (US$26 million) revenue from profits of government companies was significantly lower than 2009 because of the government’s policy of selling off state assets.

DRP pointed to the government’s decision to sell seven per cent of its stake in the highly profitable Dhiraagu, the country’s first telecommunications company, to British company Cable & Wireless for US$40 million.

“We believe that another reason for the decrease of income from government companies is handing over management of these companies to unqualified people for political purposes,” their statement said.

Since coming to power, the government has introduced a policy of public-private partnerships it hopes will enhance the efficiency of state-owned enterprises.

Beyond the 40 per cent deficit, another of the issues raised by the DRP was the lack of funding for large development projects such as a national university,

“The extraordinarily high government expenditure casts doubts on the government’s talk of reducing expenditure,” the statement said, further claiming that a large portion of the total expenditure on government employees, Rf3.9 billion (US$304 million), would be spent on political appointees.

Even with the reduction of civil servants’ salaries and dismissals, expenditure on salaries is higher than previous years, the DRP said.

In August, the government announced a raft of austerity measures to help alleviate the budget deficit. These included pay cuts of up to 20 per cent for civil servants and all political appointees ranked deputy minister and above, cutting back on foreign trips, and letting go of all government-rented buildings.

Both the president and the vice-president also volunteered to take a 20 per cent pay cut to their salaries.

Despite a high number of political appointees, the government continues to maintain that it has made fewer appointments than the former administration.

“Benefit for the people”

In their statement, the opposition party described the interest on loans as “alarming”, noting that compared to Rf279 million (US$22 million) in 2008, the amount raised from interest in 2010 will be Rf529 million (US$41 million).

The party said that while the government’s policy was to reduce the size of the government, the proposed expenditure in 2010 will be higher than in previous years.

The DRP further pointed to the increase in foreign debt from Rf755 million (US$59 million) in 2008 to Rf1,057 million (US$82 million) in 2010, adding that the interest rate had not been revealed.

“Our only hope is that this mid-term budget will be amended for the benefit of the people and the country and pave way for development. We give full assurance to the beloved people that we will do everything we can in parliament,” the statement concluded.

Speaking to MPs at parliament, Hashim said that by the IMF government finance statistics measure, the deficit for 2009 was 26.1 per cent.

But, he added, if the mid-term budget was implemented, although there would be a decline to 14.8 per cent in 2010 and 2.4 per cent in 2011, it will reach a surplus in 2012.

Hashim said the structure of the budget was agreed upon after consultations with the International Monetary Fund and recommendations by the Asian Development Bank and the World Bank.