Tag: budget review

Standing committee proposes merging MP living allowance with basic salary

The Standing Committee of the Parliament has decided to propose that the Public Finance Committee cancel the living allowance of MVR20,000 (US$1,297) paid to MPs, recommending that the amount be added to their basic salary instead.

MPs currently receive a basic salary of MVR42,500 (US$2,756) and a living allowance of MVR20,000 (US$1,297). They also receive an additional allowance of MVR20,000 (US$1,297) for attending committee meetings, although some MPs have declined from taking it. The total average monthly earnings for an MP comes to MVR 82,500 (US$5,350).

Chair of the Standing Committee, Jumhooree Party (JP) MP Abdulla Abdul Raheem stated, “Article 102 of the Constitutions says that the parliament can decide on these salaries. That is why the committee is making this recommendation to the Public Finance Committee.”

Article 102 of the Constitution states: “The president, vice president, members of the Cabinet, members of the People’s Majlis, including the speaker and deputy speaker, members of the judiciary, and members of the independent commissions and independent offices shall be paid such salary and allowances as determined by the People’s Majlis.

Abdul Raheem further stated that although the basic salary would then increase to MVR62,500 (US$4,053), the take-home pay would be less than that for an average MP.

“An MP will be getting a take-home pay of MVR58,135 (US$3,770), while the Deputy Speaker will get MVR71,000 (US$4,604) and the Speaker will get MVR73,150 (US$4,744). An MP’s pay has to be equal to that of a High Court judge, while the deputy speaker’s salary is equivalent to the pay of a Supreme Court judge. The Speaker will be paid at the same level as the Chief Justice of the Supreme Court,” Abdul Raheem explained.

“We have not really increased our salaries. We are just streamlining decisions on the matter which have been previously made in parliament. We will not be taking a penny more than now. It is only the salary structure that we are altering.”

When asked about the impacts the change in amount of the basic salary would have on pensions, Abdul Raheem responded saying “No change will come to it at all. Yes, the living allowance will be merged and made as part of the basic salary. However, the pensionable pay will remain at MVR42,500.”

Meanwhile Dhivehi Rayyithunge Party (DRP) MP Abdulla Mausoom told Minivan News today that he personally did not support the living allowance amendment.

“The public is often concerned about MPs’ salaries and privileges. I don’t think the parliament should be so often adjusting our pay in this manner. DRP always gives its members a free whip as far as MP’s privileges are concerned, so I can confidently say that I will not support this change,” he said.

Mausoom added that if the living allowance was merged with the basic salary, one notable impact would be that the take-home salary of an MP would be somewhat decreased.

“Seven percent of basic pay is deducted as pension, and then the state matches it with an equal part. If the living allowance is included in the basic pay, it would then become part of the pensionable wage.”

“It’s not about whether the pay is going higher or lower. I don’t think we should keep on adjusting our pay up or down,” Mausoom said.

Minivan News tried contacting MP Ahmed Nazim and MP Ahmed Amir. Both members were not responding to calls at the time of press.

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Government cannot accommodate MVR2.4billion budget reduction: Jihad

Finance Minister Abdullah Jihad has said the government cannot accommodate MVR2.4billion (US$156 million) worth of cuts to the proposed state budget as recommended this week by a parliamentary committee review.

Speaking to Minivan News today, Jihad said that although there was room to reduce the proposed MVR 16.9 billion (US$1.1 billion) budget unveiled last month, the level of cuts recommended by Parliament’s Budget Review Committee were not feasible to run the state next year.

The parliamentary committee this week recommended an almost 15 percent reduction to state expenditure proposed for 2013 – resulting in a total budget of MVR 14.5 billion (US$947 million). The committee’s decision was met with mixed reactions from opposition and government-aligned parties who will vote on whether to approve the budget in parliament.

The committee opted to make cuts to the budget in line with recommendations from both the International Monetary Fund (IMF) and Maldives Monetary Authority (MMA) Governor Fazeel Najeeb as part of efforts to ensure a more manageable expenditure for next year.

A recent mission from the International Monetary Fund (IMF) had urged the government to implement a raft of measures to raise revenues, advising that strengthening government finances was “the most pressing macroeconomic priority for the Maldives.”

Some senior finance figures within the country confirmed to Minivan News this week under condition of anonymity that the reductions made by the budget committee were an “encouraging” development in trying to manage state expenditure, with the proposals likely to receive Majlis support.

However, Jihad said that the Finance Ministry was presently in discussion over potential cuts to state spending, maintaining that a budget of MVR 14.5 billion would not be acceptable to the state.

“If the government agrees to cut some of the budget, I don’t think we can go that level,” he said, adding that it remained too early to give an acceptable figure by which the state would approve budget reductions.

Jihad yesterday told local media that the MVR 2.4 billion in cuts proposed by the Budget Review Committee would impact on the provision of healthcare and education – two areas he claimed had been “neglected” during the past two years.

However, the finance minister said today that the budget review committee had not suggested any specific areas or sectors where the budget needed to be cut, adding there had been “no mention” of further reductions to the health budget.

Speaking to Minivan News yesterday, MP Mohamed ‘Colonel’ Nasheed of the opposition Maldivian Democratic Party (MDP) said that the MVR 2.4bn in cuts had been made largely by reducing “unnecessary recurrent expenditures” within the budget.

Nasheed claimed that the committee had looked at specific areas of the budget where “fat” could be cut from state expenditure without directly impacting services.

“What we proposed was that there could be reductions to internal and external transport [for government employees],” he claimed. “We have big delegations going abroad at present. What we have called for is a 50 percent reduction of transport costs. It is not necessary to send 30 people abroad on trip. Five people could go for example.”

Another area Nasheed claimed cuts could be more easily made was in the purchase of new office furniture that could reduce spending by some MVR 451 million in line with the costs of supplies like stationary and paper. He claimed such expenses could be reduced through more effective online governance.

Cuts were also said to have to be made in the proposed provision of specific services to islands around the country, which Nasheed claimed had never been viable considering the current economic challenges facing the Maldives.

“[President Dr Mohamed Waheed Hassan] has made many lousy promises on his tours of islands for developments that cannot be granted. We cannot work from a fantasy budget,” he claimed at the time.

Civil servant salaries were not said to be included as part of the cost cutting, according to Nasheed.

DRP view

Despite Nasheed’s claims, the government-aligned Dhivehi Rayyithunge Party (DRP) has said that cutting the budget to MVR 14.5 billion from the proposed MVR 16.9 billion would impact the provision of government services and the functioning of independent institutions at a vital time.

DRP Deputy Leader and MP Dr Abdullah Mausoom claimed therefore that the party would wait for the government to decide whether it could function during 2013 with a reduced budget of MVR14.5 billion, before deciding whether to back the changes in the People’s Majlis.

“We need to know whether the government thinks it can manage to function with this MVR 14.5 billion. If it can then we would have no problem,” he told Minivan News yesterday.

Mausoom said that considering the cross-party composition of the Budget Review Committee that approved the cuts, support for the amendments in the People’s Majlis could prove likely.

Mausoom also contended that the “drastic” nature of the proposed reductions had raised concerns about whether funding would be distributed “fairly and equally”, as well as having a detrimental impact on the running of the state.

“It is a shame that such drastic reductions have been made. We have had a very different year [in 2012] to other years with the change of government. With 2013 set to be a presidential election year should the budget be squeezed as a result of political rivalry,” he stated.

Mausoom said that of noticeable concern was how the budget cuts may potentially impact the work of independent institutions that he said would be increasingly vital over the course of a contentious general election next year.

He added that a wide number of independent institutions in the country had already gone on record to address concerns about how the present budget would impact on their operations.

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Parliamentary reaction mixed as Majlis committee cuts MVR2.4billion from state budget

Opposition and government-aligned parties have given mixed reactions to a decision by Parliament’s Budget Review Committee to enact an almost 15 percent reduction to state expenditure proposed for 2013.

The government-aligned Dhivehi Rayyithunge Party (DRP) has claimed that cutting the budget to MVR 14.5 billion from a proposed MVR 16.9 billion would impact the provision of government services and functioning of independent institutions at a vital time.

The DRP added nonetheless that it has yet to make a decision on supporting the cuts when the reviewed budget is put to a vote on the Majlis floor.

The opposition Maldivian Democratic Party (MDP) meanwhile contended that the cuts would be made to “unnecessary” recurrent expenditure, such as transportations costs for 30-strong government delegations on overseas trips, as well as over MVR 400 million in office furniture and stationary.

While also hitting out at the “lousy” promises made by President Dr Mohamed Waheed Hassan for allegedly unrealistic development projects, the former ruling party also stressed that existing wage bills were not expected to be affected by the proposed cuts.

The comments were made after parliament’s cross-party Budget Review Committee yesterday announced that it had trimmed the proposed annual budget budget to MVR 14.5 billion from the previous figure of MVR 16.9 billion.

The committee opted to make cuts to the budget based on recommendations from both the International Monetary Fund (IMF) and Maldives Monetary Authority (MMA) Governor Fazeel Najeeb to ensure more manageable expenditure next year.

A recent mission from the International Monetary Fund (IMF) had urged the government to implement a raft of measures to raise revenues, advising that strengthening government finances was “the most pressing macroeconomic priority for the Maldives.”

Some senior finance figures within the country have confirmed to Minivan News under condition of anonymity that the reductions made by the budget committee were an “encouraging” development in trying to manage state expenditure and that the proposals were likely to receive Majlis support.

However, DRP Deputy Leader and MP Dr Abdullah Mausoom has said that despite the party’s own concerns, it would wait for the government to decide whether it could function during 2013 with a reduced budget of MVR14.5 billion, before deciding whether to back the changes.

“We need to know whether the government thinks it can manage to function with this MVR 14.5 billion. If it can then we would have no problem,” he told Minivan News today.

Mausoom said that considering the cross-party composition of the Budget Review Committee that approved the cuts, support for the amendments in the People’s Majlis could prove likely.

“Debatable: Chucking 15 percent of Maldives budget is a deliberate attempt by MDP and PPM [government-aligned Progressive Party of Maldives] to ‘choke’ government and institutions in 2013,” Dr Mausoom tweeted yesterday.

Mausoom contended today that the “drastic” nature of the proposed reductions had raised concerns about whether funding would be distributed “fairly and equally”, as well as having a detrimental impact on the running of the state.

“It is a shame that such drastic reductions have been made. We have had a very different year [in 2012] to other years with the change of government. With 2013 set to be a presidential election year should the budget be squeezed as a result of political rivalry,” he stated.

Mausoom said that of noticeable concern was how the budget cuts may potentially impact the work of independent institutions that he said would be increasingly vital over the course of a contentious general election next year. He added that a wide number of independent institutions in the country had already gone on record to address concerns about how the present budget would impact on their operations.

According to Mausoom, the MVR 16.9 billion budget presented to the Majlis by Finance Minister Abdullah Jihad earlier this month was already providing the “bare minimum” of funding needed to operate the state.

“There is a risk that when you cut into flesh you will go too far and touch bone. This nearly 15 percent reduction will impact services and independent institutions, we have to hear from government if it can manage with such finances,” he said.

With the budget amended by the committee now awaiting parliamentary approval, Mausoom added that the party had already been in general support of proposed measures to raise revenue.

State salaries

Amongst legislation considered by parliament ahead of approving the budget for 2013 has been the passing of a bill on state wage policy that will create a National Pay Commission tasked with determining salaries and allowances for the public sector.

In July, the Finance Ministry instructed all government offices to reduce their budgets by 15 percent, with only 14 of 35 offices complying by the given deadline.

However, in the same month the Finance Ministry decided to reimburse civil servants for the amount deducted from their salaries in 2010 as part of the previous government’s austerity measures.

The deducted amounts, totalling MVR 443.7 million (US$28.8 million), were to be paid back in monthly instalments starting in July.

The original budget proposal also included salary increases for military and police officers as well as plans to hire 800 new officers for the security services.

Combined with the transfer of about 5,400 employees in the health sector to the civil service, some MPs this month estimated that the state wage bill would shoot up by 37 percent.

When questioned on the government’s decision to reimburse civil servants and increase military expenditure for the current budget, Dr Mausoom said it was important for the country to prioritise rule of law in the country and respect the role police and military played in society.

He claimed that the biggest challenge on the budget was in fact dealing with what he claimed was years economic mismanagement, particularly during the administration of former President Mohamed Nasheed and the Maldivian Democratic Party (MDP) over the last three years.

Mausoom added that Nasheed government’s attitude towards privatisation had not helped with state expenditure, accusing the previous administration of staffing private corporations with political appointees to give the false impression the state had trimmed civil service employment.

In light of this alleged financial mismanagement by the former government, Mausoom argued that while there was a need to further streamline state expenditure under the present government, such cuts should be made gradually rather than the drastic cuts he believed had been proposed by the Budget Review Committee.

However, MDP MP for Nolhivaram and fellow review committee member Mohamed ‘Colonel’ Nasheed said that the cuts would be made largely by reducing “unnecessary recurrent expenditures” within the budget.  As such, no civil service wages are expected to be touched by the cuts, he added.

Nasheed claimed that the committee had looked at specific areas of the budget where “fat” could be cut from state expenditure without directly impacting services.

“What we proposed was that there could be reductions to internal and external transport [for government employees],” he claimed. “We have big delegations going abroad at present. What we have called for is a 50 percent reduction of transport costs. It is not necessary to send 30 people abroad on trip. Five people could go for example.”

Another area Nasheed claimed cuts could be more easily made was in the purchase of new office furniture that could reduce spending by some MVR 451 million in line with the costs of supplies like stationary and paper. He claimed such expenses could be reduced through more effective online governance.

Cuts were also said to have to be made in the proposed provision of specific services to islands around the country, which Nasheed claimed had never been viable considering the current economic challenges facing the Maldives.

“The president has made many lousy promises on his tours of islands for developments that cannot be granted. We cannot work from a fantasy budget,”

Finance Minister Jihad, Economic Development Minister Ahmed Mohamed and head of the Parliamentary Financial Committee Ahmed Nazim were not responding to calls from Minivan News at the time of press.

Budget criticism

When delivered to the People’s Majlis earlier this month, the state budget for 2013 presented by Finance Minister Jihad came under heavy criticism from both opposition and government-aligned parties over the course of a 16-hour budget debate.

MP Ibrahim Mohamed Solih ‘Ibu’, MDP Parliamentary Group Leader contended at the time that the proposed budget could not be salvaged or improved through amendments.

Meanwhile, MP Abdulla Yameen, Parliamentary Group Leader of the Progressive Party of Maldives (PPM), said that the government’s objectives or policies could not be discerned from the proposed budget.

“These projects are very random or ad hoc. The government’s planning should be better than this,” he said.  Yameen was not today responding to calls.

While the debate over the budget regularly came to a halt due to frequent loss of quorum – most MPs complained of the lack of funds allocated for development projects in their constituencies. These projects included developments such as harbours, water and sanitation systems, additional classrooms and upgrades to health centres.

Earlier this month, State Minister for Environment and Energy Abdul Matheen Mohamed moved to play down reports that his department had slammed the proposed state budget for neglecting the “fundamental rights” of Maldivians, claiming there had been a “misunderstanding” with local media.

Environment Ministry Permanent Secretary Ahmed Saleem was quoted by the Sun Online news agency at the time as claiming that some 15 projects proposed by his department had been excluded from the budget. These projects were said to deal with issues including waste management, as well as supplying water and sewerage systems to more islands around the Maldives.

However, Matheen claimed that Saleem’s reported comments had been the result of a “misunderstanding” by its author.  He alleged that the journalist had focused on a few points of a long meeting with the committee.

Consolidation

Speaking to Minivan News earlier this week, Jihad reiterated that in trying to balance state spending with providing national developments, the government favoured a policy of population consolidation – relocating certain island populations to larger administrative areas.

He added that a strong focus had also been provided to amending revenue raising measures, while also trying to cut spending at government offices.

The Finance Ministry issued a circular at the beginning of the month to all government offices and state institutions with instructions to implement cost-cutting measures during the final month of the year that included cancelling all overseas trips.

However, Jihad maintained that the circular was not a long-term financial strategy, but rather a traditional measure imposed by the government during December.

“At the end of the year some offices have a habit of spending lavishly,” he said. “This is just a regular measure at this time of year to curb costs.”

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Parliamentary committee suspends budget review process

The parliamentary committee chosen to evaluate the Rf11.9 mid-term budget for 2010 has suspended the process after requesting information from the finance ministry.

In an email to Minivan News today, MP Ahmed Nazim (pictured) of the opposition People’s Alliance, chairman of the 15-member ad hoc committee and deputy speaker of parliament, said some of the information was presented in a “confusing and misleading” way.

“The budget is very misleading as the finance ministry has not provided any details for major changes in budgeted figures. For example expenditure of IGMH [Indira Gandhi Memorial Hospital] has been reduced from Rf317,662,050 to Rf248,842,204,” he said.

“The question is why? When we questioned the health minister in the committee only we came to know that they plan to corporatise IGMH by forming a Health Corporation and remove or reduce state subsidies.”

He added subsidies for the Maldives National Broadcasting Corporation was not included in the budget:  “Can TVM [Television Maldives] and VoM [Voice of Maldives] finance their 2010 operations on their own? Surely not.”

Among other discrepancies were expenditure and revenue included in the budget for dissolved bodies and departments.

“The government recently announced that they have abolished Public Complaints Bureau and Department of medical Services. BUT expenditure amounting to Rf2.5 million is included in 2010 budget for Public Complaints Bureau in Home Ministry budget and Rf6.5 million is included as REVENUE from Dept of Medical Services,” he said.

Further, the committee noted that the budget for atoll hospitals was higher than the previous year.

“When we questioned the health minister and senior officials of the health ministry they said they don’t know the reason for that. They also said that MAY BE it is because the budgets of all other health centre’s of the atoll is included in the atoll hospital budget of that respective atolls,” said Nazim. “We cannot go ahead with a budget review with answers like ‘may be’. We need to be sure.”

Nazim said the finance ministry has not responded to the committee’s letter requesting information.

But, he added, the committee would be able to complete its evaluation in the required time frame.

Officials from the finance ministry did not respond to Minivan News’ requests for comment today.

Parliament yesterday wrapped up the budget debate after 60 MPs spoke throughout three sittings.

MPs of the opposition Dhivehi Rayyithunge Party-People’s Alliance (DRP-PA) coalition strongly criticised the budget, arguing it did not include sufficient funds for development projects.

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