MDP, JP MPs propose 19 amendments to 2015 budget

Opposition Maldivian Democratic Party (MDP) MPs and Jumhooree Party (JP) MPs submitted 19 amendments at yesterday’s sitting of parliament to the record MVR24.3 billion (US$1.5 billion) state budget for 2015.

Among the MDP’s nine amendments were scrapping plans to impose a 10 percent import duty on staple foodstuff and oil and allocating MVR100 million (US$6.4 million) and MVR75 million (US$4.8 million) respectively to provide subsidies for fishermen and farmers.

Other proposals included adding persons with disabilities and single parents as categories eligible for government subsidies to the poor and requiring the finance ministry to submit quarterly reports to parliament every three months concerning the implementation of the budget.

The minority party has issued a three-line whip for its MPs to vote against the budget if none of the proposed revisions are passed.

The JP’s 10 amendments meanwhile included providing MVR50 million (US$3.2 million) in subsidies to fishermen and MVR40 million (US$2.5 million) to farmers, ensuring sufficient funds for local councils and allocating MVR5 million (US$324,254) out of the contingency budget for local NGOs that provide education and training to persons with special needs.

The party also proposed conducting a survey to determine discrepancies in salary and allowances among state employees.

The 19 amendments were proposed after Progressive Party of Maldives (PPM) MP Ahmed Nihan – chair of the budget review committee – presented a report prepared by the committee following its review process

While the committee had passed the budgetlast week without significant changes to revenue or expenditure, pro-government MPs proposed a number of recommendations to reduce recurrent expenditure.

However, amendments proposed by MDP and JP MPs during the budget review process did not pass at the committee.

Reflecting its combined 48-seat majority in the 85-member house, PPM and coalition partner Maldives Development Alliance MPs held a voting majority on the committee.

During yesterday’s debate on the budget committee report, JP Leader Gasim Ibrahim warned that introducing new taxes could damage the economy and the tourism industry.

The business tycoon claimed that Seychelles and Mauritius “went bankrupt” when tourists stopped visiting due to excessive taxation.

Occupancy rates at Maldivian resorts declined in November as a result of imposing the reintroduced US$8 bed tax along with a 12 percent Tourism Goods and Services Tax (T-GST), Gasim contended.

Industry insiders recently told Minivan News that the high-end resorts would struggle to deal with any additional taxation following the recent rise of T-GST.

According to the Maldives Monetary Authority’s monthly economic review for October, however, the occupancy rate during the month remained unchanged at 81 percent compared to the same period last year.

In October 2014, total bednights rose marginally in annual terms while the average duration of stay decreased slightly and stood at 6.0 days,” the central bank noted.

Gasim meanwhile said the JP would vote for the budget despite misgivings, which included lack of funds for establishing pre-schools and insufficient funds allocated for independent institutions and the judiciary.

Adjourning yesterday’s sitting, Speaker Abdulla Maseeh Mohamed announced that the amendments would be put to a vote next Tuesday ahead of a final vote on the 2015 budget.

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Committee passes budget, recommends constitutional amendment to reduce independent commissions

The People’s Majlis budget committee has passed the record MVR24.3 billion (US$1.5 billion) state budget for 2015 and recommended a constitutional amendment to reduce the number of independent institutions.

The proposal by ruling Progressive Party of the Maldives (PPM) MP Riyaz Rasheed said that bringing the state’s independent institutions under one body would reduce government expenditure.

The committee did not make any changes to the budget.

The 11 recommendations also included a proposal by Rasheed to amend the Decentralisation Act to reduce the number of local councils and cut salaries of all councilors except the council’s president. All councillors except the council president would be paid an allowance based on their attendance at council meetings.

MPs of the opposition Maldivian Democratic Party (MDP) and the PPM’s ally Jumhooree Party (JP) did not vote for the two recommendations.

During former President Mohamed Nasheed’s tenure, the PPM leadership – formerly of the Dhivehi Rayyithunge Party (DRP) – rejected the MDP’s proposal for councilors to be established in only seven provinces.

DRP MPs at the time insisted on establishing a council in all inhabited islands and an atoll council for each of the 20 atolls.

As per DRP amendments, islands with a population less than 3000 now have five paid councilors, islands with a population between 3000 and 10,000 have seven paid councilors, and islands with a population over 10,000 have nine councilors.

Meanwhile, atolls which consist of two parliamentary constituencies elect three members from each constituency while atolls which have more than three Majlis constituencies elect two members from each constituency. Each Majlis constituency consists of 5000 people.

MDP MPs had walked out in protest from the Majlis sitting, claiming the DRP amendments would create “20 mini governments” and create an enormous financial burden on the state.

The budget committee today also passed a proposal by Rasheed requiring the government to formulate a master plan for population consolidation.

A proposal by the MDP to conduct all government trainings through the Maldives National University was also passed.

The committee also voted in favor of MDP MP Mohamed Aslam’s proposal requiring the government to commence work on establishing a development bank, get back money owed to the government, and to decrease the number of expatriate workers in the tourism sector by increasing the stake of Maldivians.

The Maldives Development Alliance (MDA)’s recommendation to establish a low interest loan scheme for housing and boat building, and the Jumhooree Party (JP) recommendation requiring the government to prioritise projects on constitutionally mandated services also passed.

The MDP had proposed establishing a pay commission to set state wage policy by the end of 2015 and providing a grace period of two to three years for new taxes, but the PPM dominated committee rejected these proposals.

The committee also rejected MDP proposals requiring deference to the Fiscal Responsibility Act and Public Finance Act in budget implementation.

The budget will now be forwarded to the Majlis floor for final review.

Related to this story

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MDP says 2015 state budget neglects transportation

The Maldivian Democratic Party (MDP) transportation committee has said that the proposed 2015 state budget does not give adequate importance to transportation.

While speaking at an MDP press conference today, the Committee’s Chair Dr Ahmed Shamheed said that the government has failed in fulfilling its manifesto which states that providing cheap, effective, and speedy transportation as one its aims.

“Even though the government recently announced that it has achieved 90 percent of the goals outlined in its manifesto, not even 1 percent of the transportation related goals have been achieved,” said Shamheed.

Shamheed noted that the Progressive Party of Maldives (PPM) in its manifesto outlined that it would finish up the ongoing regional airport development projects. However, He said that no regional airports have been opened in the last year.

President Abdulla Yameen recently revealed plans of developing an airport in the north at Haa Dhaalu Kulhudhuhfushi in the upcoming year.

The government has secured a preliminary agreement for the development of Ibrahim Nasir International Airport, with the cabinet revealing recently that  the Beijing Urban Group and Maldives Airports Corporation Limited had finished the drawings of the airport and were in the process of submitting the proposal to China’s Exim bank in order to finance the project.

Plans for the ambitious Malé-Hulhulé bridge project were also said to edging closer to realisation as a Chinese team visited the Maldives to conduct a preliminary survey this month.

While the record MVR24.3 billion (US$1.5 billion) proposed budget for the upcoming year allotted MVR63 million (US$5 million) for regional airports under the tourism ministry, it is unclear whether the amount is for recurrent or capital expenditure.

Also speaking at the press conference, MDP transport committee member Ahmed Zahir said that the atoll ferry system introduced during MDP’s government is currently in turmoil as the government does not prioritise development of the ferry system.

“The transportation systems in the atolls are being destroying and I am afraid that it might go back to the old days where the inter-atoll transportation was monopolised by individuals with boats,” said Zahir.

The MDP committee also slammed the government for budgeting expected revenues from increasing the import duty on vehicles and fuels, stating that the measures would have a significant impact on the guest house industry as travelling costs within the country would increase severely.

Previously, MDP’s education and training committee claimed that the funds allocated for education in the budget were poorly prioritised and would lead to corruption.

Additionally, the MDP budget review committee stated that the budget is ‘aimless’ and serves only administrative purposes, suggesting that programme budgets submitted during the MDP government were part of a strategic action plan aimed at fulfilling the party’s promises.

President Abdulla Yameen dissolved the Ministry of Transport and Communication in July, transferring regional airports to the Ministry of Tourism and the Transport Authority to the Ministry of Economic Development.

The move came shortly after the dismissal of Transport Minister Ameen Ibrahim following break down of the election-winning coalition of the Jumhooree Party – of which Ameen is a member – and the PPM.


Budget committee meets MMA governor behind closed doors

In an unprecedented move today, pro-government MPs on parliament’s budget review committee voted through a motion to exclude media from a meeting with Maldives Monetary Authority (MMA) Governor Dr Azeema Adam.

The central bank governor was due to give her professional opinion on the 2015 state budget.

Article 85(b) of the Constitution states that the People’s Majlis could exclude the public and the press from committee meetings “if there is a compelling need to do so in the interests of public order or national security.”

However, Article 85(c) states that parliament could specify “additional reasons” for closed sessions.


Majlis passes record MVR 17.95 billion budget

The People’s Majlis has passed a record MVR 17.95 billion (US$ 1.16 billion) budget today.

Out of the 72 MPs present, 55 voted for the budget, two voted against and 11 abstained.

The budget deficit now stands at MVR1.3 billion (US$84.3 million). Recurrent expenditure accounts for over 70 percent of the budget.

President Abdulla Yameen Abdul Gayoom had initially proposed a MVR 17.5 billion (US$ 1.1 billion), but the People’s Majlis Budget Committee brought a number of amendments, first increasing the budget to MVR 18.3 billion (US$ 1.19 billion) and later reducing it to MVR 17.8 billion.

However, during Wednesday’s budget debate, opposition Maldivian Democratic Party (MDP) MPs complained about lack of development funds for their constituencies. The committee met that night and increased the Public Sector Investment Program’s budget to MVR 260.5 million (US$ 16.9 million).

The Budget Committee had also added MVR 171.1 million (US$ 11 million) to the budget of the state’s independent institutions.

At today’s sitting, 27 budget recommendations were passed. These include a proposal by Jumhooree Party (JP) leader Gasim Ibrahim to reallocate MVR 122.5 million (US$ 7.9 million) from the Finance Ministry’s contingency budget to the independent state institutions.

MDP MP Ahmed Sameer’s proposal to reallocate MVR 7.1 million (US$ 460,440) from the Finance Ministry’s contingency budget to the health sector also passed.

According to the budget report, 44 percent is allocated for social development, 21 percent for public services, 15 percent for loan repayments and 9 percent for economic development.

The central bank Maldives Monetary Authority (MMA) and opposition MPs have expressed concern over tenuous revenue raising measures in the budget.

These include hiking Tourism GST from 8 percent to 12 percent, revising import duties, continuing tourism bed tax for one more year, raising airport departure charge for foreign passengers from US$ 18 to US$25, leasing 12 islands for resort development, introducing GST for telecommunication services and obtaining resort lease payments as a lump sum.

Several of these proposals require revising existing legislation.

Meanwhile, the World Bank has warned the Maldives’ economy is at risk due to excessive state expenditure and methods used to finance the deficit.


Committee recommends increasing 2014 budget to MVR18 billion

The People’s Majlis Budget Committee has recommended raising the proposed 2014 state budget from MVR17.5 billion (US$ 1.1 billion) to MVR18 billion (US$1.2 billion) despite concerns over prospective revenue raising measures.

The latest recommendations will have to pass on the Majlis floor, with the final report being sent to People’s Majlis Speaker Abdulla Shahid on December 21.

President Abdulla Yameen proposed a record MVR17.5 billion budget shortly after assuming power. The budget has a projected deficit of 2.2 percent, with over MVR3 billion (US$ 224 million) is to set to come from new revenue raising measures that require amendments to legislation.

These measures include hiking Tourism Goods and Services Tax (T-GST) from 8 to 12 percent, revising import duties, a continuation of the tourism bed tax, raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, introducing GST for telecommunication services, and charging resort operators in advance for resort lease extensions.

The Ministry of Finance had proposed similar revenue raising measures the 2013 budget but was ultimately unable to obtain the expected revenue after the parliament rejected several measures – including increasing airport departure fees.

The MVR600 million (US$39 million) expansion is mainly to fund tourism promotion, Public Sector Investment Programmes (PSIP), and an increase to the budgets for the state’s independent institutions.

The Governor of the Maldives Monetary Authority (MMA) Fazeel Najeeb has expressed concern that the central bank may have to print money if expected revenue is not realised.

Najeeb told the People’s Majlis Budget Committee on Saturday (December 14) the government must not proceed with new development projects unless and until the new revenue is assured.

“If not, ultimately the government will come to the MMA to find the cash to proceed with those projects. And then again we have more rufiyaa in the economy to chase after the few dollars,” Najeeb said.

Several independent institutions including the Employment Tribunal, Judicial Services Commission (JSC), Department of Judicial Administration, Election Commission, Human Rights Commission, Anti- Corruption Commission, and the Prosecutor General had complained about the proposed budget cuts last week.

According to the Maldives Inland Revenue Authority (MIRA), the institution had asked for MVR73 million (US$4.7 million), but the Finance Ministry had reduced the figure to MVR 45 million (US$ 29 million).

Speaking at the Budget Committee meeting last week, the Commissioner General of Taxation Yazeed Mohamed said financial constraints had affected MIRA’s ability to collect taxes.

MIRA had set its own goal to collect MVR10 billion (US$648 million) in taxes this year, but would only able to collect approximately MVR 8.4 billion (US$ 545 million), Yazeed said.

While the Ministry of Finance estimates MVR10 billion (US$648 million) can be raised in taxes for 2014, MIRA believes it can collect over MVR11 billion (US$ 713 million) if the institution is granted adequate financial resources, Yazeed added.

Budget reductions will also affect MIRA’s ability to train employees, he said.

Meanwhile, the Elections Commission said the allocated MVR57 million (US$3.7 million) is not enough for the commission to hold the constitutionally mandated local council and parliamentary elections. The commission noted it still had over MVR29 million (US$1.9 million) in unpaid bills from the repeatedly re-scheduled presidential elections.

Only the Civil Service Commission expressed satisfaction with its allocated budget. The commission had asked for MVR28 million (US$ 1.8 million), before the Finance Ministry reduced the amount to MVR25.7 million (US$1.7 million).

Meanwhile, the World Bank has said that measures used by the government to finance the deficit – such as monetisation, the accumulation of unpaid bills, and the rise of short term debt through the sale of T-bills – posed “macro-risks” to the economy.

President Yameen has expressed concern over “extremely high” state expenditure and pledged to make cuts, though he has as yet only managed to make modest cuts such as halving the presidential salary and marginally reducing the salaries of state and deputy ministers.


Government transferred tsunami money to Denmark, alleges budget committee

Money intended to rebuild houses in Meemu atoll Kolhufushi after tsunami damage was instead sent to another country via telex transfer, chairman of budget review committee Ahmed Nazim alleged last night.

Nazim claimed that Rf 256 million (US$20 million) allocated to the reconstruction project in the supplementary budget on 20 April 2009 had been sent overseas 18 days earlier.

“This was done in violation of the budget passed by the People’s Majlis,” reads the budget committee report.

The Rf256 million was originally earmarked for purchasing shares of the Maldives Water and Sewerage Company (MWSC), but was reallocated to construct houses in Meemu Kolhufushi and Thaa Madifushi, two islands devastated by the tsunami.

“The amount was still included in the budget proposed 18 days later and even when the item was changed, we note that the government did not provide this information to the Majlis,” Nazim said. “This has to be looked into further. We will investigate and find out how this happened.”

During last night’s debate, Maafanu West MP Abdullah Abdul Raheem said the Rf 256 million was telexed abroad on two separate occasions on 2 April.

“I don’t know where it was sent yet, but I believe it was sent to Denmark,” Raheem said.

The transfer was not so much suspicious as “a matter of misleading the parliament,” Nazim claimed.

“The government submitted the budget requesting Rf256 million to purchase MWSC shares from two companies. Now we know that money was transferred before the budget was tabled in the Majlis,” he said.

During his presentation of the budget report, Nazim was interrupted by a point of order from MDP MP Ahmed Hamza who accused him of misusing the time to present the budget report on unrelated matters.

“These things have been written in the report and can be seen by the members,” Nazim responded. “This is not something I am saying on my own. This is the truth. No matter how much you try to hide the truth, it can’t be done.”

The budget review committee had also found that the government failed to conduct a research study into universal health care in the first six months of 2009, and had sold its shares in telecoms provider Dhiraagu without seeking parliament’s approval.

Responding to the accusations in parliament today, Finance Minister Ali Hashim said MPs had been “repeatedly informed” of how the funds were used.

“The transaction occurred before the revised budget was passed under an agreement signed by the government,” he said. “I have informed Majlis about this before as it was stated in the agreement.”

The agreement was made with a foreign company to purchase shares of MWSC, he said, adding the government has secured funds to rebuild houses for displaced victims of the tsunami.

Moreover, said Hashim, the majority stake of Dhiraagu was sold in accordance with the constitution and the financial regulations.


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.