Tag: expenditure

Government revenue declines in May

Government revenue declined by MVR19.2 million (US$1.2 million) in May compared to the same period last year and reached MVR1.2 billion (US$77.8 million), the central bank has revealed in its monthly economic review.

Total expenditure during the month meanwhile rose by MVR104.9 million (US$6.8 million) and amounted to MVR1.5 billion (US$97 million).

“The decline in total revenue during May 2015 was mainly due to the decline in both tax and non-tax revenue which fell by MVR9.5 million and MVR1.7 million, respectively,” the review stated.

“The fall in tax revenue was mainly contributed by the decline in revenue from business profit tax and tourism tax, while non-tax revenues declined owing to a significant fall in revenue from resort lease rent. Meanwhile, the increase in expenditure was largely due to a growth in recurrent expenditure.”

In May, the government obtained US$20 million from Saudi Arabia for budget support. Finance minister Abdulla Jihad told Minivan News at the time that the funds were to be used to “manage cash flow” as revenue was lower than expected.

A large portion of forecast revenue is expected later in the year, he said, adding that shortfalls are currently plugged through sale of treasury bills (T-bills).

According to the Maldives Monetary Authority (MMA), the total outstanding stock of government securities, including T-bills and treasury bonds (T-bonds), reached MVR18.4 billion (US$1.1 billion) at the end of May, representing an annual increase of 36 percent.

The forecast for government income in this year’s record MVR24.3 billion (US$1.5 billion) budget is MVR21.5 billion (US$1.3 billion).

The projected revenue includes MVR3.4 billion (US$220 million) anticipated from new revenue raising measures, including revisions of import duty rates, the introduction of a “green tax”, acquisition fees from investments in special economic zones (SEZs), and leasing 10 islands for resort development.

The MMA’s monthly economic review meanwhile revealed that gross international reserves increased by 65 percent in May compared to the corresponding period in 2014 and stood at US$703.7 million, “of which usable reserves amounted to US$229.7 million.”

“During the review month usable reserves also registered increases in both monthly and annual terms by 12 percent and 41 percent, respectively. As for gross reserves in terms of months of imports, it rose both in monthly and annual terms and stood at 4.2 months at the end of May 2015.

Tourism and fisheries

The economic review noted that tourist arrivals declined by three percent in April compared to the same period in 2014, reaching a total of 102,242 guests.

“The annual decline in arrivals was contributed by the significant decline in tourist arrivals from Europe,” the MMA observed.

“In April 2015, total bednights registered a decline of 7 percent in annual terms, as the average duration of stay declined from 6.2 to 5.9 days. Partly reflecting the decrease in bednights, the occupancy rate of the industry declined to 73 percent in April 2015 from 80 percent in April 2014.”

In its quarterly economic bulletin, the central bank noted that despite a three percent growth in tourist arrivals in the first quarter of 2014, tourist bednights declined by three percent “owing to the fall in average stay of tourists from 6.3 days in Q1-2014 to 6.0 in the review quarter.”

Tourism receipts also decreased by four percent in the first quarter compared to the corresponding period in 2014.

“On the supply side, the operational capacity of the tourism industry increased by 3% when compared with Q1-2014 to reach an average of 27,827 beds. Reflecting this and the decline in tourist bednights, the occupancy rate of the industry fell to 79 percent in Q1- 2015 from 84 percent in Q1-2014,” the bulletin stated.

The volume of fish purchases meanwhile decreased to 6,134.6 metric tonnes in April, registering an annual decline of 11 percent.

“In May 2015, both the volume and earnings on fish exports declined in annual terms by 35 percent and 12 percent, respectively. This was mainly owing to the decrease in the volume and earnings of frozen skipjack and yellowfin tuna exports,” the economic review revealed.

In other sectors, the MMA noted that construction activity “continued to expand and remained robust as indicated by the annual increase in construction-related imports and increased bank credit to the sector during Q1-2015.”

“Activity in the wholesale and retail trade also grew, as indicated by increased imports by the private sector (excluding tourism) and bank credit to the sector.”

The rate of inflation in Malé meanwhile accelerated to 1.7 percent in April from 1.1 percent in March.

“The pick-up in inflation during the month was mostly contributed by the growth in fish prices and prices charged for housing rent,” the central ban explained.

“The monthly percentage change in the [Consumer Price Index] increased in April 2015. This was mainly due to the rise in fish and cigarett e prices. Cigarette prices rose during the month due to the increase in the import duty levied in April 2015.”

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Government expenditure rose 58 percent in June, reveals MMA

Government spending in June rose 58 percent compared to the same period in 2013, the Maldives Monetary Authority’s (MMA) monthly economic review for July 2014 has revealed.

Total expenditure, excluding net lending, “amounted to MVR1.6 billion (US$103 million) in June 2014,” stated the report released on Sunday (August 31).

Total government revenue, excluding grants, meanwhile rose four percent in annual terms and reached MVR0.9 billion (US$58 million).

“The increase in total revenue during June 2014 was largely due to the 57 percent growth in import duty and the 9 percent increase in total goods and services tax,” the central bank explained.

“Meanwhile, non-tax revenue registered a decline owing to the 18 percent decline in resort lease rent. As for the increase in expenditure, it was mainly due to the 30 percent increase in current expenditure.”

Budget deficit

In early August, Finance Minister Abdulla Jihad revealed that the government was facing “great difficulty in managing the budget deficit” due to shortfalls in revenue.

The ballooning budget deficit – which Jihad warned could reach MVR4 billion (US$260 million) or 10.6 percent of GDP – could affect the government’s ability to pay civil servants, he said.

A fiscal deficit of MVR1.3 million (US$84,306) had been projected in the record MVR17.96 billion (US$1.1 billion) budget approved by parliament.

The budget was inclusive of proposed revenue raising measures – many of which had failed to materialise during the previous administration – amounting to MVR3.4 billion (US$220 million), or 19 percent of the budget.

“Expenses keep on increasing, even as we don’t receive any revenue. We did not get the expected revenue this year either,” Jihad said last month.

Despite parliament passing the measures in February – including tax and import duty hikes – Jihad predicted at the time that the anticipated revenue might not be realised in full due to compromises.

“We try to make regular salary payments even if we have to take loans in order to do so,” Jihad said.

The monthly review revealed that the total outstanding stock of government securities – treasury bills and bonds – increased 18 percent in July compared to the corresponding period last year, reaching MVR13.7 billion (US$888 million).

“The annual growth in government securities was contributed by the increase in the amount of T-bills issued by the government to manage its growing cash flow requirements,” the review explained.

The MMA had previously warned that shortfalls in revenue and overruns in expenditure could jeopardise the country’s debt sustainability.

In May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the untargeted subsidies” – and increasing revenue.

Tourism, fisheries and inflation

Tourist arrivals in July increased 20 percent from the previous month and 14 percent compared to July 2013, reaching 100,191 visitors, the review noted.

While bednights rose by nine percent in annual terms, the report noted that average duration of stay declined from 6.0 days in July last year to 5.7 days this year.

“With the increase in bednights, the occupancy rate also rose to 69 percent in July 2014 from 66 percent in the same period last year,” the review stated.

Fish purchases meanwhile declined by 44 percent to 2,124.7 metric tonnes compared to July 2013, the report revealed.

While the volume of fish exports fell by 54 percent, earnings on fish exports declined by 41 percent, which was “contributed mainly by the fall in export of frozen yellow fin tuna.”

The rate of inflation in the capital decreased to 2.4 percent from 3.5 percent in July 2013 and 3.6 percent the previous year, the review found, which was due to “the slower growth of food prices, especially fish, and the moderation in the growth in prices charged for rent and health services.”

The review noted that the trade deficit widened by 38 percent in July compared to the same period last year “due to the 27 percent increase in imports and the 34 percent decline in exports.”

Gross international reserves rose four percent from the previous month and 42 percent in annual terms, the review stated, amounting to US$497.6 million at the end of July.

“This mainly reflects the temporary increase in foreign currency transfers by the commercial banks in the review period,” the central bank explained.

“As for reserves in terms of months of imports, it also increased in both monthly and annual terms and stood at 3.2 months during the review month.”

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World Bank provides US$6.5 million grant for public financial management system

The World Bank has approved a US$6.5 million International Development Association (IDA) grant to support the strengthening of the Public Financial Management (PFM) System of the Maldives, which would help “government institutions to make informed decisions on fiscal adjustments in an efficient manner”.

In a press release on Tuesday (July 15), the World Bank noted that “a high level of fiscal discipline” was needed for translating the current administration’s key policies and objectives into “a medium-term development strategy”.

“A key challenge for the country will be to ensure that the government’s social and economic goals are fully consistent with the urgent need for fiscal consolidation to restore fiscal and debt sustainability,” said Country Director for Sri Lanka and Maldives Francoise Clottes.

“We are happy to assist the government in this endeavour with both financial and technical support.”

According to the World Bank, “the project will help enhance budget credibility, transparency, and financial reporting of central government finances.”

“The entry points for intervention will be the Economic Policy Planning Section, National Budget Formulation and Analysis Section, Debt Management Division, Tender Evaluation Section, Secretariat of the Privatisation and Corporatisation Board, and Treasury and Public Accounts Division; internal audit sections; and line ministries.”

“The project design also includes support to strengthen the institutional framework of key Ministry of Finance and Treasury functions and to enhance knowledge transfer through on-the-job training by technical experts,” said Jiwanka Wickramasinghe, Task Team Leader of the Project.

The press statement noted that the proposed PFM Systems Strengthening Project would contribute to the government’s long-term and “overarching goal by addressing the most urgent PFM weaknesses.”

Macroeconomic challenges

In its annual global economic prospects report released last month, the World Bank had predicted a positive outlook for the Maldivian economy in 2014 with a projected GDP growth of 4.5 percent, “driven by strong tourist arrivals, particularly by robust growth in the Chinese tourist segment.”

The Maldives Monetary Authority (MMA) had also revealed earlier in June that economic activity expanded in the first quarter of 2014 “driven by the strong growth of the tourism sector during the ongoing high season of the industry.”

The central bank noted that the 10 percent annual increase in arrivals during the first quarter was “entirely driven by the significant increase (24 percent) in arrivals from the Chinese market.”

Meanwhile, in late May, a delegation from the World Bank led by the World Bank Vice President Philippe Le Houérou – in his first visit to the Maldives since assuming the post in July 2013 – met President Abdulla Yameen and agreed to work with the government in developing a national strategy for fostering growth and consolidating public finances.

The discussion focused on “the need to reduce fiscal deficits, create a favourable investment climate for the private sector and delivery of key public services,” according to a press release from the World Bank.

Le Houérou noted that the challenges faced by the Maldives includes “balancing public accounts while delivering public services on some 200 islands across hundreds of kilometres of the Indian Ocean.

The issue is how Maldives can make the most of its potential in order to achieve inclusive and sustainable development.”

In May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the untargeted subsidies” – and increasing revenue.

In a report on macroeconomic developments in 2013, the MMA had warned that shortfalls in revenue or overruns in expenditure in 2014 “will undermine medium-term debt sustainability” and adversely affect the exchange rate and prices.

Despite a positive outlook for growth, “there is a considerable amount of uncertainty surrounding the 2014 budget. Overruns in current expenditure will most likely lead to financing difficulties for the government or further crowding out of the private sector,” the central bank warned.

“Any setback to fiscal consolidation either due to slippages in revenue or current expenditure will undermine medium-term debt sustainability and will have adverse implications for exchange rate and prices.”

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Ambassador to EU illegally paid US$17,000 as allowance in 2011, reveals audit report

The former Maldives Ambassador to the European Union (EU) was paid US$17,000 as a special allowance from September to December 2011 in violation of regulations governing allowances and benefits for employees at diplomatic missions, auditors have revealed.

The audit (Dhivehi) of the Foreign Ministry for 2011 has found that the Maldives embassy in the EU was instructed by Foreign Minister Ahmed Naseem in August 2011 to pay former ambassador Ali Hussain Didi US$3,500 a month as a ‘special representational grant.’

As the allowance was not given to other ambassadors, Auditor General Niyaz Ibrahim recommended recovering the funds from the responsible officials.

The report noted that allowances and benefits for staff at overseas diplomatic missions were specified in regulations enacted by the President’s Office and that the foreign minister did not have the power to authorise such payments.

Auditors also discovered that the former ambassador withdrew the US$3,500 allowance twice in October 2011.

Additionally, €7,566 was deposited to the ambassador’s bank account as a representational grant.

The regulations state that representational grants should be provided as reimbursement once bills of expenses incurred in the performance of diplomatic duties are submitted, the report explained.

However, the report noted that the ambassador did not submit bills for €7,566 worth of expenses.

Former ambassador Didi resigned from the post in July 2012 after 32 years of service.

The audit report also flagged discrepancies between the Foreign Ministry’s annual financial statement and its general ledger at the Finance Ministry, which were not reconciled.

While MVR145 million (US$9 million) was included in the general ledger as bilateral grants, officials at the ministry informed auditors that they were unaware of the inclusion.

Auditors discovered that the Finance Ministry transferred MVR138 million (US$8.9 million) of the grant aid to various state institutions, leaving MVR6.4 million (US$415,045) unaccounted for.

Other cases

The auditor general recommended an investigation by the Anti-Corruption Commission into the hiring of a British national as a senior advisor at the Maldives mission to the EU in March 2010.

Auditors discovered that two employment contracts were signed with the advisor in March 2010 by the foreign minister and state minister respectively, noting that auditors could not confirm which of the two agreements was valid.

While the agreement signed by the foreign minister stipulated that the advisor must be given six months notice before termination of the contract, the agreement signed by the state minister stipulated a four month notice period.

The advisor was paid €25,992 as salary and health insurance for six months when the contract was terminated in June 2011.

Among other cases flagged in the report, auditors found that MVR52,122 (US$3,380) was spent on business class plane tickets for the deputy high commissioner to the UK and his wife to travel to the Maldives in late 2011 in violation of the regulations, which state that only the high commissioner could travel on business class.

A total of MVR64,080 (US$4,155) was meanwhile spent in 2011 to celebrate the ministry’s 78th anniversary in violation of regulations.

The report also noted that the state-owned residence in London – Rosemont Avenue number 10 – had fallen into disrepair as a result of poor maintenance.

While the residence was transferred under the care of the Education Ministry in mid-2011, the report noted that it was not fit for use.

The audit report further revealed that the Maldivian Ambassador to Saudi Arabia as well as the embassy’s counsellor were paid allowances for periods when the pair were away on official trips and vacations.

As 13,957 Saudi riyals and 11,568 Saudi riyals respectively should have been deducted from the allowances in accordance with the regulations, the auditor general recommended recovering the money either from the pair or the officials at the Foreign Ministry responsible for the oversight.

The auditor general also recommended recovering MVR137,676 (US$8,928) spent out of the ministry’s budget to pay mobile phone bills for the foreign minister in 2011 as a phone allowance for ministers had not been approved by parliament.

Moreover, MVR192,416 (US$12,478) was spent to settle mobile phone bills of foreign ministry staff in violation of rules set by the Finance Ministry and Civil Service Commission.

The ministry’s audit report for 2010 had revealed that MVR235,001 (US$15,240) was spent to pay the minister’s phone bills.

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Tourist arrivals increase six percent in March

Tourist arrivals in March increased six percent in annual terms but declined five percent in monthly terms, reaching 105,560 guests during the month, according to the Maldives Monetary Authority’s (MMA) monthly economic review released yesterday (April 30).

“The annual increase was due to the rise in the number of arrivals from China which offset the decline in arrivals from Europe,” explained the central bank’s monthly update of “developments in key economic sectors”.

Total bednights meanwhile rose two percent in annual terms, “while the average duration of stay declined marginally.”

The occupancy rate also decreased slightly compared to March 2013, falling to 82 percent. The report noted that the operational capacity of the tourism industry rose during the review month.

The Tourism Ministry meanwhile revealed yesterday that tourist arrivals in the first quarter of 2014 increased 9.7 percent compared to the same period of 2013, reaching a total of 321,561.

Europe retained the largest market share, accounting for of 51.3 percent of all arrivals to the Maldives with a total of 321,561 tourists during the first quarter of the 2014, the Tourism Ministry stated.

Asia and the Pacific recorded a growth rate of 24.4 percent at the end of first quarter of 2014, bringing in an additional 26,606 tourists to reach a total of 135,839.

The region accounted for 42.2 percent of arrivals to the Maldives at the end of first quarter of 2014.

According to the Tourism Ministry, the Chinese market expanded by 24 percent with an additional 16,960 tourists compared with the same period of 2013.

Statistics from the Tourism Ministry show that 331,719 Chinese tourists visited the Maldives last year, which was a 44.5 percent increase from the previous year.

Chinese tourists accounted for 29.5 percent of all tourist arrivals in 2013.

The Maldivian economy is largely dependent on tourism, which accounted for 28 percent of GDP on average in the past five years, and generated 38 percent of government revenue in 2012.

Inflation

Meanwhile, in the second largest industry, the volume of fish exports as well as earnings “fell significantly by 80 percent and 66 percent respectively” compared to March 2013.

The decline was accounted for by the fall in the volume of and earnings from “fresh, chilled or frozen tuna exports.”

“The International Monetary Fund (IMF) commodity price index fell marginally in monthly and annual terms during March 2014,” the central bank noted.

“The monthly decline was mainly due to the fall in both petroleum and metal prices which off set the increase in food prices during the review month.”

The price of crude oil in March 2014 was US$104 per barrel.

The inflation rate in the Maldives meanwhile decelerated to 2.3 percent in March from 3.4 percent the previous month.

“This was largely contributed by the slower growth in food prices, especially fish, and also due to the moderate growth in the prices charged for housing and utilities,” the report explained.

“Similarly, the rate of inflation declined marginally in monthly terms during March 2014, which was also due to the slower growth in fish prices.”

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Budget of MVR16.4 billion for 2014 submitted to parliament

An estimated budget of MVR16.4 billion (US$1 billion) for 2014 was submitted to parliament today by Finance Minister Abdulla Jihad, with a projected deficit of 2.5 percent of GDP.

Presenting the budget this morning, Jihad said the forecast for government revenue in 2014 was MVR13.9 billion (US$901 million), with income from taxation projected at MVR10.2 billion (US$661 million) and non-tax revenue of MVR3.5 billion (US$226 million).

In addition, MVR2.3 billion (US$149 million) was expected from new revenue raising measures.

As government expenditure in 2014 was estimated to be MVR14.9 billion (US$966 million), Jihad said, the resulting budget deficit would be MVR988 million (US$64 million).

The fiscal deficit would be plugged by foreign assistance, loans and domestic sources of finance, Jihad said.

The total budget reaches MVR16.4 billion including loans and foreign aid, Jihad explained, which was not included in total expenditure.

While the economy grew by 3.7 percent in 2013, economic growth is estimated to be 4.5 percent next year, he said.

Similar to previous years, Jihad observed, recurrent expenditure (MVR12 billion) accounts for 73 percent of the total budget, with almost half spent on salaries and allowances for state employees in addition to administrative costs, interest payments and subsidies.

A total of MVR2.2 billion (US$142 million) was allocated for social security and welfare spending, Jihad said, which covers the government health insurance scheme ‘Aasandha,’ electricity subsidies, pensions for the elderly and expenditure on price controls.

While MVR2.4 billion (US$155 million) was allocated for the Public Sector Investment Programme (PSIP), Jihad said MVR1.9 billion (US$123 million) of it would be spent on infrastructure projects in the atolls such as construction of harbours and establishing sewerage systems.

The finance minister revealed that government revenue was expected to reach MVR11.5 billion (US$745 million) by the end of 2013.

The original forecast in the 2013 budget was however MVR12.9 billion (US$836 million).

The 2013 fiscal deficit, projected at MVR1.4 billion (US$90 million), would stand at MVR1.7 billion (US$110 million) by the end of the year, Jihad said.

Following a budget debate next month, the proposed budget would be sent to the Budget Review Committee, consisting of all the members of the economic affairs and public finance oversight committees, for scrutiny and possible amendments.

In December 2012, the Budget Review Committee deducted more than MVR1 billion (US$64.8 million) from the MVR16.9 billion (US$1 billion) budget submitted by Finance Minister Jihad before parliament passed the a MVR15.3 billion (US$992 million) budget for 2013.

Revenue raising measures

In its latest Quarterly Economic Bulletin, the Maldives Monetary Authority (MMA) observed that government finances had “further deteriorated in the first six months of 2013” due to a sizeable shortfall in expected revenue coupled with a marked increase in recurrent expenditure.

The central bank’s economic bulletin explained that around 15 percent of total revenue budgeted for 2013 – MVR1.8 billion (US$116.7 million ) – was to be raised from new revenue measures, “which so far have not materialised.”

The revenue raising measures proposed in the 2013 budget included hiking Tourism Goods and Services Tax (T-GST) to 15 percent from July 2013 onward, raising airport service charge to US$30, leasing 14 islands for resort development, raising tariffs on oil, introducing GST for telecom services, and “selectively” reversing import duty reductions.

In April, parliament rejected government-sponsored legislation to raise the departure tax on outgoing passengers, prompting Finance Minister Abdulla Jihad to seek parliamentary approval to divert MVR 650 million (US$42 million) allocated for infrastructure projects in the budget to cover recurrent expenditure.

The move followed a cabinet decision to delay implementation of new development projects financed out of the budget due to shortfalls in revenue.

The economic bulletin also revealed that the total government expenditure of MVR6.7 billion (US$435 million) in the first half of 2013 was eight percent higher than the same period in 2012.

The growth of government spending was “entirely due to the 21 percent (MVR965.3 million) growth in recurrent expenditure, which was partly offffset by the 26 percent (MVR440.6 million) decline in capital expenditure during the period.”

Presenting the 2014 budget today, Jihad said the government proposes six new revenue measures to be implemented next year pending parliamentary approval,

  • Hiking T-GST to 12 percent from 8 percent at present
  • Revising import duties
  • Delaying abolishing the tourism bed tax for one more year
  • Raising airport departure charge from foreign passengers from US$18 to US$25
  • Leasing 12 islands for resort development
  • Introducing GST for telecommunication services (currently exempt from the tax)

Austerity

Jihad also advised implementing a raft of austerity measures, contending that the “expensive” public management model adopted in the Maldives was inappropriate for a small island state.

Almost 50 percent of government income was spent on employees, Jihad noted, advising revision of the state pension system and reduction of the numbers of island and atoll councillors as well as members of independent institutions and boards of government-owned companies.

As “the basis of increasing state expenditure is having to provide all facilities to small populations in separate islands,” Jihad said prompt implementation of a population consolidation policy was necessary for a long-term solution.

The current model of more than 1,000 elected councillors established by the Decentralisation Act passed in 2010 by the then-opposition majority parliament was branded “economic sabotage” by the ousted Maldivian Democratic Party (MDP) government, which had proposed limiting the number of councillors to “no more than 220.”

In March 2011, former chair of parliament’s Finance Committee, MP Ahmed Nazim, told Minivan News that the opposition Dhivehi Rayyithunge Party (DRP) had been too “heavy handed” in working with government.

“I was advocating that even now, we will work with the MDP to reduce the number of [island] councillors in small areas from five to three posts.  There is simply not enough work for all of them to do. Some opposition took a heavy handed approach meaning there was no need for compromise,” the current Progressive Party of Maldives (PPM) MP said, despite having voted for the bill framed by the opposition.

Meanwhile, in its professional opinion on the 2013 budget, the Auditor General’s Office stated that a policy of population consolidation together with effective measures to reduce the public sector wage bill was necessary to rein in the continuing fiscal deficits.

Moreover, in November 2012, a team from the International Monetary Fund (IMF) advised that strengthening government finances was “the most pressing macroeconomic priority for Maldives”.

Jihad said today that a National Pay Review Board had begun reviewing the pay scale of state employees, which was among the recommendation’s of the IMF mission.

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Finance Ministry appeals for cooperation with cost-cutting measures

The Finance Ministry has appealed for cooperation from all state institutions to the government’s cost-cutting measures by not hiring additional staff, creating new posts or replacing vacancies.

A budget circular issued by the ministry on Sunday notes that expenditure on state employees accounts for 35 percent of government spending in the 2011 budget while 49 percent of government expenditure so far this year (excluding foreign loans and free aid) was on salaries and allowances.

“Lately a number of institutions have been requesting permission from the ministry to add new posts in 2011 and hire employees for vacant posts,” reads the circular signed by Finance Minister Ahmed Inaz. “However since the ministry believes that, considering the state of the budget, there is no space to add employees or fill vacant posts this year, the ministry urges cooperation for controlling the number of employees.”

As part of the government’s belt-tightening measures to curb expenditure, the circular notes, the Finance Ministry requires offices and state institutions to seek authorisation in writing for capital expenditure and overseas trips as well as repair and maintenance work.

The ministry had previously informed all state institutions to not create new posts or fill vacancies, the circular noted.

“In addition, posts of employees who leave their government jobs under the ministry’s “voluntary redundancy programme” has been abolished,” it added. “The ministry believes that as a result of this programme expenditure on employees out of the state budget will be controlled to an extent.”

The Finance Ministry recently revealed that the country’s fiscal deficit in 2011 reached Rf1.3 billion (US$84 million) in the first week of September.

The circular meanwhile noted that the government has pledged not to raise nominal wages until the end of 2012 under the staff-level agreement with the International Monetary Fund (IMF).

In May, the IMF gave preliminary approval for a three year economic programme in the Maldives, after the government agreed to “a package of policy reforms that will help stabilise and strengthen the Maldives’ economy.”

“In sum, this package of proposed policy reforms will help stabilize and strengthen Maldives’s economy, and the mission thus reached a staff-level agreement with the Maldivian authorities on a three-year economic program that could be supported by a new IMF lending arrangement,” reads an IMF press statement in May. “The agreement reached, however, remains subject to review by IMF management and approval of the IMF’s Executive Board, which could consider a program request from Maldives in July. It is anticipated that an approved program would encourage key donors to contribute additional financial support.”

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MP allowances unjustified in current economy: GIP

If the state is unable to reimburse the amount reduced from civil servants’ salaries for MP allowances, then allowances must be reduced, said the Gaumee Iththihaad Party (GIP) in a statement today.

GIP called on the general public to work with the government in reducing state expenditure, while Vice President Dr Mohamed Waheed Hassan Manik specifically objected to the Rf20,000 committee allowance currently designated for MPs by the Parliamentary Finance Committee, Haveeru reports.

MPs who attend 75 percent or more of parliamentary meetings are eligible for this allowance.

On Thursday, a court case was allegedly filed for a court order asking the Finance Ministry to halt the budget for an MP allowance, which was approved on August 9.

In recent weeks, the Finance Committee also approved a lump sum of Rf140,000 as back-pay for MPs. The bonus would cost the state Rf10 million; the state deficit is currently Rf1.3 billion.

The decision to give the Rf20,000 committee allowance has been protested by politicians and civil society members. Concerned citizens also protested the recent bonus of Rf140,000 last month.


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