Tag: budget

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.

Likes(0)Dislikes(0)

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.”

Likes(0)Dislikes(0)

State Environment Minister plays down budget dispute, alleges media “misunderstanding”

State Minister for Environment and Energy Abdul Matheen Mohamed has played down a report that his department yesterday slammed the proposed state budget for neglecting the “fundamental rights” of Maldivians, claiming there had been a “misunderstanding” with local media.

The Sun Online news agency yesterday reported that senior environment ministry officials had raised fears before the Majlis’ National Development Committee that it had been allotted an insufficient budget for proposed water and sewerage projects needed across the country.

Environment Ministry Permanent Secretary Ahmed Saleem was quoted as claiming that some 15 projects proposed by his department had been excluded from the budget is being debated within parliament this week. 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.

Saleem was reported as saying that complaints over the matter had also been sent to Finance Minister Abdulla Jihad, who had in turn had responded that any amendments to the budget would have to be made through the Majlis with support of MPs.

Both finance chief  Jihad and Economic Development Minister Ahmed Mohamed were not responding to calls from Minivan News at the time of press.

Speaking following yesterday’s meeting with the National Development Committee, Permanent Secretary 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.

While Matheen said that there were some “concerns” about the present status of the budget allocated to the Environment Ministry, he that alleged the article’s conclusions were “very misleading”.

“The budget issue is very sensitive right now, so i’m afraid I cannot make any comments about the matter at present,” he said. “The islands are all asking what they will have from the ministry.”

Matheen added that he was presently unable to comment on the exact nature of the “misunderstanding” contained within the Sun Online report due to the fact discussions on finalising the state budget were ongoing.

Jumhoree Party (JP) MP Hassan Adil, a member of the National Development Committee, was unavailable for comment when contacted on the challenges in trying to balance ministry expenditure in the current economic climate, asking Minivan News to call this evening. However, Adil was not answering calls at the time of press.

Budget discussion

Presenting the budget to parliament last week, Finance Minister Jihad explained that next year’s budget deficit was to be financed with MVR 971 million (US$62 million) as budget support and MVR 1.3 billion (US$84 million) from Treasury bill (T-bill) sales.

However, as debate on the budget commenced yesterday amidst, regularly coming 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.

Meanwhile,  it was revealed last week that the proposed budget for defence expenditure for 2013 was found to be 14 percent higher than the funds allocated during 2012.

A total of MVR 930.9 million (US$60.3 million) was proposed for defence expenditure, which amounts to 5.5 percent of the total budget.

Balance of payments

With the Majlis currently contemplating the 2013 budget, an International Monetary Fund (IMF) mission to the Maldives last month noted that a ballooning fiscal deficit had “implied a rise in the public debt ratio, which now stands at over 80 percent of GDP.

According to the organisation, these developments also helped to boost national imports, thus worsening dollar shortages in the economy and putting pressure on MMA (Maldives Monetary Authority) reserves.”

The IMF forecast for the current account deficit was “nearly 30 percent of GDP this year.”

“Gross international reserves at the MMA have been declining slowly, [and] now account for just one and a half months of imports, and could be more substantially pressured if major borrowings maturing in the next few months are not rolled over,” the IMF mission warned.

The mission recommended formulating “a realistic and prudent budget for 2013″ to rein in the fiscal deficit, suggesting hiking taxes and “selectively” reversing import duty reductions.

According to an overview of the economy presented by the Finance Ministry along with the state budget (Dhivehi) proposed to parliament last week, the current account deficit in 2012 was expected to be 27 percent of GDP.

Water shortages

Following water shortages that authorities said affected over 100 inhabited islands back in May, Addu City Mayor Abdulla Sodig at the time claimed financial support was the key challenge in ensuring sufficient supplies of drinking water to the public, even with the assistance of local resorts and the Maldives National Defence Force (MNDF).

Minivan News reported back in April that in the country’s southerly Addu Atoll, an estimated 90 percent of the local population were reliant on rainfall to bolster their drinking water supplies.

Numerous islands in the atoll are said to experience severe supply issues for drinking water annually as a result.

Likes(0)Dislikes(0)

Government spending MVR 5 million on 136 political appointees

The government spends MVR 5 million a month (US$325,000) on 136 political appointees, approximately US$4 million a year, according to statistics obtained by local news outlet Sun Online.

The monthly spend includes 19 Minister-level posts at MVR 57,500 (US$3730), 42 State Ministers (MVR 40,000-45,000, US$2600-2900), 58 Deputy Ministers (MVR 35,000, US$2250), five Deputy Under-Secretaries (MVR 30,000, US$1950) and 10 advisors to ministers (MVR 25,000, US$1620).9\

President Mohamed Waheed is officially paid (MVR 100,000, US$6500) a month, Vice President Waheed Deen (MVR 75,000, US$4850).

Waheed’s Special Advisor Hassan Saeed, the Chancellor of the National University and the Controller of Immigration are paid at ministerial level.

On paper, the annual MVR 60 million spend on political appointees is approximately MVR 40 million less than the spend on political appointees during the former administration.

Figures released by the Ministry of Finance in July 2011 showed that the executive was spending MVR 99 million (US$6.5 million) annually on 244 political appointees, two percent of the state’s total wage bill.

The country’s 77 MPs are meanwhile paid a base salary of MVR 42,500 (US$2,750) per month, a further MVR 20,000 (US$1,300) per month in allowances for phone, travel, and living expenses, and a further MVR 20,000 in committee allowances.

Likes(0)Dislikes(0)

“Time for everyone to tighten their belts”: Finance Minister Jihad

Minister of Finance and Treasury Abdulla Jihad has said the state must brace to enact austerity measures in the long-term if authorities are to address the country’s fiscal deficit – with further budget cuts anticipated in all government departments over the next 12 months.

Jihad has told Minivan News that previous commitments by government institutions to cut their budgets by 15 percent would need to be followed by further reductions to state and civil service spending in next year’s budget, regardless of financial assistance secured from China and India.

The minister’s comments were made as Parliament’s Finance Committee – reconvening for the first time since July – agreed this week to provide an additional MVR 12 million (US$780,000) in budget to the Auditor General’s (AG’s) Office, according to local media.

Auditor General Niyaz Ibrahim said that under the existing state budget, an agreement was reached that an additional MVR 58.8 million (US$3.8 million) would be provided to the AG’s Office, though it was decided to request a smaller proportion of these funds, the Sun Online news service reported.

People’s Aliance (PA) party MP and Finance Committee Chair Ahmed Nazim was not responding to calls from Minivan News at the time of press.

However, Jihad claimed that the decision to provide the extended budget was a “concern” considering the state was not getting enough direct revenue at present to justify its spending.

“We need to be fair when it comes to the budget, everyone should have to follow the same rules,” he claimed. “Otherwise this would mean that I could only reduce the budget of the Finance Ministry in future. It is time that everyone should tighten their belts.”

According to Jihad, provisions for the extension of funds to the AG’s Office had been included in the state budget, but he claimed that the country needed to work together in reducing state spending where possible.

Regarding claims that further cuts to the state budget wuld be required during the next 12 months, Chairman of the Civil Service Commission (CSC) Mohamed Fahmy Hassan said that it had “managed” with the 15 percent cuts already made to its expenditure.

Fahmy added that as no request had so far been made by the government to reduce the size and budget of civil society organisations, it did not have concerns about potential job cuts.

“Our mandate is to provide human resources to the government. As long as there is no effect on the salaries or number of civil servants, we will not seek to intervene in the policy of government,” he said.

With state income lower and expenditure higher than predicted, this year’s budget deficit had been forecast to reach MVR9.1billion (US$590 million), equivalent to around 28 percent of nominal GDP.

Financial assistance

In the last few months, authorities in India and China had both pledged to provide financing to the Maldives. Finance Minister Jihad said that of these funds, US$25 million being provided by India would be put into “budget support” to try and address state spending. A large amount of the funding meanwhile from China, which would total US$500 million, was expected to be put towards development projects such as housing construction, the Finance Ministry added.

The Indian government had announced that it would be granting the Maldives an additional as part of the US$100 million standby credit facility agreed last year under the previous government.

China has also pledged funding to the government of President Dr Mohamed Waheed Hassan following an official state visit to the country.

The loans, equal to nearly one quarter of the Maldives’ GDP, are said to include $150 million (MVR2.3billion) for housing and infrastructure, with another $350million (MVR5.4billion) from the Export-Import Bank of China, reported Reuters.

Jihad has maintained that the state still needs to reassess where further spending cuts can be made going forward.

Just last month, the Finance Ministry forwarded proposals it claimed would cut MVR2.2billion (US$143million) form the national budget.

The austerity measures include raising Tourism Goods and Services Tax (TGST) to 15 percent,  terminating electricity subsidies in Male’, increasing import duties on alcohol and imposing a 3 percent  duty on oil, “reforming” the Aasandha health insurance scheme, and reducing the budget of every Ministry and independent institution by 15 percent – among other measures.

The original budget for 2012 envisioned that revenue would rise to MVR11.4billion (US$740million) with expenditure anticipated to be MVR14.5 billion (US$941million). This would have resulted in a budget deficit of around MVR3billion (US$194million), representing 10 percent of GDP.

However, several resort managers voiced concern at the time that the proposed revenue amendments would serve only to  affect the financial viability of the country’s tourism industry, while providing little improvement in service or support in return.

Likes(0)Dislikes(0)

Finance Ministry will consider budget increase requests from independent institutions

The finance ministry has today said that it has received requests for budget increases from a number of independent institutions. The ministry did not specify which institutions these were.

Minister of Finance and Treasury Abdulla Jihad has told local media today that the requests for increases will be reviewed by the ministry. He said that increases would be granted after assessing how much need there is for it.

Jihad said that the previous 15 percent deduction from the budgets of all institutions had been made for the sake of bringing down state expenditure, further saying that this could not be done without the support of all stakeholders.

Likes(0)Dislikes(0)

Finance Ministry orders government institutions to reduce budgets by 15 percent

The Finance Ministry has ordered all government institutions to immediately reduce their budgets by 15 percent, in a circular sent out by Minister Abdulla Jihad.

Independent and government institutions were in early June  instructed to reduce their budgets by June 20 and June 15 respectively.

According to Haveeru, only 14 of the 35 government offices met the deadline.

“Even though we have not received any complaints so far, they did express concern over reducing the budgets. Some offices will face difficulties. But we don’t have a choice,” Jihad told the paper.

In a statement, the Minister said that the state budget had to be decreased by 15 percent as income estimated for 2012 had fallen short of expectations.

Despite the order to cut budgets, a circular issued by the Finance Ministry on July 19 ordered all government offices to repay the amount cut from civil servant salaries from January 2010 to December 2012 by the former government, starting from July onwards.

The circular said the money should be paid monthly and not in a lump sum, and advised all institutions to pay the amount from the annual budget for wages. If the money in budget was not enough, the finance ministry advised the institution to cut the money from the budget allocated for other expenses.

The wage repayments, amounting to Rf443.7 million (US$28.8 million), has not been accounted for in this year’s state budget, contributing to a 27 percent budget deficit that has already drawn concern from the International Monetary Fund.

Besides a crippling deficit, the Maldives is also facing a foreign currency shortage, plummeting investor confidence, spiraling expenditure, and a drop off in foreign aid.

MIRA revenue

The Maldives Inland Revenue Authority (MIRA) has meanwhile published its second quarter report for 2012, detailing the majority of government revenue (with the exception of import duties).

The MIRA report highlights a 16.8 percent increase in revenue collected compared to the same period for 2011, attributable to the increase in tourism GST from 3.5 percent in 2011 to 6 percent in 2012.

Tourism land rent collected for the period was MVR 465.4 million (US$30.2 million)  – a drop of 24.9 percent that was 12.3 percent lower than expected.

Airport Service Charge revenue meanwhile fell 18.6 percent, to MVR 172 million (US$11.2 million).

Total revenue collection for the first half of the year was MVR 3.5 billion, an increase of 59.2 percent compared to the corresponding period of 2011 but 8.4 percent lower than projected.

Likes(0)Dislikes(0)

Government pledges Aasandha health scheme “will not collapse”

The government remains committed to running the Aasandha universal health insurance programme initiated in January, claiming the scheme “will not collapse” despite the present economic difficulties facing the country.

State Health Minister Thoriq Ali Luthfee told Minivan News that there was “no cause for alarm” about the future of the scheme, following the revelation that it has yet to settle four months of unpaid premium charges it owes to cover medical treatments.

Aasandha is a public-private partnership with Allied Insurance. Under the agreement, Allied splits the scheme 60-40 with the government. The actual insurance premium will be paid by the government, while claims, billing and public awareness will be handled by the private partner.

Aasandha Managing Director Mohamed Shafaz has claimed that the government had failed to cover weekly premium payments as agreed under the Aasandha contract since March.  He alleged that while the scheme was continuing to run, the shortfall in state funding was creating some difficulties for service providers such as hospitals and pharmacies both in the Maldives and the wider South Asia region.

Thirty day target

Without detailing specifics, State Health Minister Luthfee said that the government was presently involved in consultations to clear outstanding bills. He added that a target of 30 days had been set to try and settle outstanding debts to creditors such as Aasandha’s management.

“The important factor is the scheme is continuing,” he said. “The country is going through a difficult time economically and ongoing consultations are currently taking place to clear our bills. We are trying to do this right now. The system is not going to collapse.”

Aasandha’s MD Shifaz said that several general meetings had been held with the government about the issue of back payments – charges he claimed were not contested by authorities.

“I’m not sure the reason for the delay, but the outstanding amounts have not been disputed. It appears they are having difficulty in making payments,” he said.

He did not reveal the exact amount of premium charges presently owed by the government.

When questioned on the impact that failure to pay debts might have on the scheme’s stability, Shafaz claimed that Aasandha’s future was directly tied to service providers such as hospitals and pharmacies, particularly smaller enterprises in the outer atolls.

“The difficulties right now are for the service providers. If they can accept the credits terms we are offering right now, then perhaps they can manage,” he said.

Shafaz said that pharmacies and medical centres on smaller islands were more likely to suffer as a result of failure to secure government payments for the scheme.  He added that certain hospitals in Sri Lanka and India also affiliated with Aasandha would need to cover expenses accrued under the universal health system.

Privatised concerns

Back in April, Parliament’s Finance Committee proposed ceasing the provision of universal health care in private hospitals, stating that the scheme would not be economically viable unless private hospitals were excluded.

The proposals were made in a report published by the committee, that recommended the Aasandha service only be made available at the state-run Indira Gandhi Memorial Hospital (IGMH) and other government health centres and corporations around the country.

Calls to limit Aassandha have so far proved divisive in the Majlis and the coalition government. Ahmed Thasmeen Ali, head of the government-aligned Dhivehi Rayyithunge Party (DRP), has previously been an outspoken critic of limiting the provision of universal healthcare at private premises.

Thasmeen told local media at the time that the amendments forwarded by the parliamentary Finance Committee were not the “right way to go” to bring about changes to the scheme, alleging they could undermine parliament’s role in holding the government to account in future, Haveeru reported.

He added that should amendments to the scheme need to be made, he did not want to see the cessation of free healthcare to the public.

Both Thasmeen and DRP Deputy Leader Ibrahim Shareef were not responding to calls by Minivan News at the time of press today.

The Aassandha service was initially intended to cover emergency treatment, including treatment overseas if not available locally, along with all inpatient and outpatient services, domestic emergency evacuation, medicine under prescription, and diagnostic and therapeutic services.

However, Aassandha Managing Director Shafaz said that consultations were set to take place over the possibility of amending the main contract signed between the government and the health scheme’s provider to include an extended number of private practices under the project.

He stressed that there remained “huge concern” at present that such an extension would actually serve to exacerbate the present shortfall in government payments.

“Deluge”

Despite these extension talks, one private doctor not affiliated with Aasandha raised concerns that an apparent “deluge” of patients to IMGH and the private ADK hospital in Male’ were overburdening hospitals linked to the universal coverage scheme.

Conversely, the same doctor contended that large numbers of other health centres and laboratories had seen patient numbers plummet, endangering their long-term existence.

Dr Ahmed Razee, a former Director General of IGMH hospital presently serving as an internist with special interest in diabetes and kidney diseases across Male’ , alleged that under the current agreement, Aasandha had served to create a “grossly unfair monopoly”. Dr Razee added that the scheme had created an environment where even established practitioners were losing regular patients to an “inferior behemoth”.

“When ADK and IGMH pharmacies give you free drugs, why would go to any other pharmacy? I am afraid only Aasandha registered prescriptions are honoured,” he said. “These are available only at IGMH and ADK. Who will go any further – and pay also in the bargain – to another pharmacy?”

Dr Razee contended that when the scheme was launched during the administration of former President Mohamed Nasheed, government promises of a fair share of service provision for private health centres saw a number of enterprises – not just ADK – investing millions of rufiya in health provision.

“With the current monopoly that the government has created, these clinics, pharmacies and labs – representing over a thousand jobs – are going bankrupt,” he claimed. “The deluge of patients on ADK and IGMH is creating too much work for staff and is reducing standards and causing mistakes and making the waiting period entirely too long, and thus expensive, for people from the islands.”

Budgetary factors

Beyond the implications for healthcare, the Maldives has also come under increasing pressure from international organisations to make widescale cuts to state funding.

While recent Maldives’ Inland Revenue Authority (MIRA) figures for May showed national revenue had increased f 9.5 percent compared with the corresponding month in 2011, the figures were not substantial enough to shrink the present national budget deficit.

Governor of the MMA Dr Fazeel Najeeb recently stated that the Maldives was “in a dangerous economic situation never before seen in recent history.”

The International Monetary Fund (IMF) has expressed its concern over the country’s dire balance of payments situation which has been estimated by the Majlis’s Financial Committee to be 27 percent of GDP this year.

The 2012 budget was initially estimated to be around 9.7 percent of GDP, but in May was revealed to be much larger after significantly reduced expenditure and increased expenditure was taken into account.

Spending unaccounted for in the 2012 budget following the controversial change of government of February 7 has included the promotion of a third of the police force, lump sum payments to military personnel, Rf100 million (US$6.5 million) in fishing subsidies, reimbursement of Rf443 million (US$28.8 million) in civil servant salaries following cuts by the previous administration, the creation of two new ministries, and the hiring of international PR firms to counter negative publicity.

Former President Mohamed Nasheed had previously criticised President Waheed and his government for attempting to introduce fees for Aasandha, claiming the administration had squandered funds marked for development on the police and military.

Likes(0)Dislikes(0)

Finance Minister announces plans to revise import duties, GST

Finance Minister Abdulla Jihad has announced the government intends to revise changes made to import duties and the Goods and Services Tax (GST), reports Haveeru.

Jihad is said to have explained that the revisions to import duties, initiated by the previous administration, have “not even come close” to covering the cost of income lost after reductions to import duties.

Haveeru reports that the Rf2 billion the state had previously earned from import duties had been halved whilst the GST earnings had not made up the shortfall as anticipated.

Jihad told Haveeru that the government was continuing to engage in deficit reduction measures which will include reducing state expenditure by 15 percent whilst raising Tourism Goods and Services Tax (TGST).

The current budget deficit has been estimated by the Majlis Financial Committee to be 27 percent of GDP this year – Rf9.1 billion (US$590 million).

Likes(0)Dislikes(0)