Tag: amendments to Public Finance Act

Government hampered by “restrictive” public finance law, says President Yameen

Amendments brought to the Public Finance Act by the opposition-controlled parliament during the three-year tenure of former President Mohamed Nasheed are posing challenges and difficulties to successive administrations, President Abdulla Yameen has said.

The amendments (Dhivehi) voted through in June 2010 stipulated that the executive must seek parliamentary approval before either obtaining foreign loans or leasing state property. Nasheed at the time declared that the law would make it “impossible for the government to function.”

Addressing supporters in the island of Naifaru in Lhaviyani atoll Sunday night (May 4),Yameen claimed that laws imposing “various restrictions” on the executive were passed by the People’s Majlis due to the “irresponsibility” of the former head of government.

But former President Dr Mohamed Waheed had also faced “difficulties” in governing after succeeding Nasheed in February 2012, Yameen said adding: “This is the problem we are facing as well.”

The executive was still forced to seek parliamentary approval “even for a MVR1,000 (US$65) loan,” he said.

“Scorched earth” tactics

The passage of the amendments in 2010 prompted the en masse resignation of President Nasheed’s cabinet on June 29 in protest of the opposition’s alleged obstruction and “scorched earth” policy.

While former Special Majlis MP Ibrahim Ismail ‘Ibra’ characterised the amendments as the “grand finale of decimating the executive” by wresting control from the executive, the Nasheed administration filed a case at the Supreme Court contesting the constitutionality of some provisions.

Yameen, who was leader of the minority opposition People’s Alliance at the time, said Nasheed’s “selling off of state assets and giving up uninhabited islands” had prompted the opposition’s actions.

“When many such actions that were harmful to the public occurred, a group of people advocating as the people’s representatives – myself included – determined things that cannot be done without a say of the parliament and passed a law called the Public Finance Act to hold the government accountable,” he said.

Following the controversial transfer of power in February 2012, the new administration – made up of former opposition parties – sought to reverse the restrictions concerning the sale and lease of state properties.

In December 2013, the Auditor General’s Office revealed that President Waheed’s administration violated finance laws in securing a domestic loan worth MVR300 million (US$ 19.45 million) from the Bank of Maldives (BML) for budget support.

Yameen also noted that he inherited an MVR30 billion (US$2 billion) national debt when he assumed office in November.

“That means to reach the ground I have to travel 30,000 million feet,” he said.

Coalition discontent

Contrary to Nasheed and Waheed, Yameen said he did not anticipate difficulties due to non-cooperation from the legislature as the Progressive Coalition – comprising of the ruling Progressive Party of Maldives (PPM) and coalition partners Jumhooree Party (JP) and Maldives Development Alliance (MDA) – has secured a comfortable majority in the incoming 18th People’s Majlis.

But Yameen has admitted to “some discontent” within the ruling coalition due to a dispute over which party should control the seat of Majlis Speaker.

“The public should work to change this discontent among us to contentment,” he said, adding that constituents should demand the cooperation of opposition MPs as well as JP MPs.

Yameen suggested that the public voted for candidates fielded by the JP and MDA due to the trust the Maldivian people had in PPM leader, former President Maumoon Abdul Gayoom.

Stressing the importance of the public’s backing and support for the government, Yameen urged constituents to “constantly remind” their MPs that they would not have “a second chance” if they vote against government proposals.

As the public voted for a change in both the presidential and parliamentary elections with high hopes for economic progress, Yameen said that the government’s policies and development projects should not be hindered due to problems within the coalition.

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Amendments will send food prices soaring, warns government

The prices of staple foodstuffs will “go up dramatically” if amendments to the Public Finance Act are ratified, warns the State Trading Organisation (STO).

At the now daily President’s Office press conference yesterday, Undersecretary Ibrahim Rasheed revealed that the STO has informed President Mohamed Nasheed that prices would spike if the government ceased its subsidies.

“Until subsidies can be given again through new legislation, subsidies given by the government for foodstuffs will become illegal (if the amendments are ratified),” he said. “Therefore, if this amendment becomes law, a kilo of rice will be at Rf9.75, a kilo of flour Rf6.12, a kilo of sugar Rf8.01.”

In 2009, the government provided over Rf139 million in food subsidies to STO to control prices of staple foods.

According to STO, the price of a kilo of rice or flour will increase threefold while the price of a kilo of sugar will double.

Rasheed accused opposition MPs of attempting to block government services and aid in order to foster negative public perception and shift blame to the administration.

“Even for greed of power, this is too much,” he said.

The parliament’s amendment bill to the Public Finance Act, which was voted through in June, was cited by the cabinet as one of the main reasons for their resignation.

“Act of deception”

In a press release today, the main opposition Dhivehi Rayyithunge Party (DRP) denies that government subsidies will have to be discontinued.

Condemning the claim as “an act of deception”, the statement accuses the government of trying to “mislead the public,” undermine public confidence in MPs and “light fires of hatred.”

“The reality is that while President Nasheed’s government does not have the capability to provide the services required by citizens, this is a cheap propaganda activity to incite fear among the public by using the State Trading Organisation and other such institutions,” it reads.

The amendments

According to the amendment proposed to article seven of the Public Finance Act, “any relief, benefit or subsidy by the state” must be given in accordance with laws passed by the People’s Majlis.

Legislation governing the issuance of subsidies and other state benefits has not yet been proposed to parliament.

The amendment to article 10(a) reads that financial benefits provided by the government in order to pursue its policies must also be issued in line with laws passed by parliament.

However, article 10(c) of the amendment bill states that the government could grant “some financial assistance” from the emergency funds allocated in the state budget under certain circumstances, such as to provide relief after natural disasters.

Meanwhile, 10(d) states that assistance could still be given “if the government believes providing financial assistance to a businessman or a business facing financial difficulties was in the public interest” or if the financial difficulty is believed to impact “the lives of a sufficiently large number of people in society”.

Moreover, article 34(c) stipulates that the government must implement recommendations of the parliamentary committee that reviews the state budget.

Addressing press after the resignation of the cabinet, President Nasheed announced that he would veto the amendments as it would make it “impossible for the government to function” and because “MPs themselves could see that it was proposed without the slightest consideration.”

Article 91(b) of the constitution states that any bill returned to parliament “shall be assented to by the President and published in the Government Gazette if the Bill, after reconsideration, is passed without any amendments, by a majority of the total membership of the People’s Majlis.”

“In my view, these things are happening because a few members of the People’s Majlis are working to preserve their self-interest,” Nasheed said. “If you look at the latest amendment to the public finance law you will see very clearly what’s written in those amendments. It is very clear that those amendments have provisions that directly involve Majlis members’ interest. So what I see here is that we can’t allow [people to] destroy the constitution of the Maldives and render it powerless while hiding behind the protection of the Majlis.”

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