State institutions blame Finance Ministry for unpaid electricity bills

Senior officials of state institutions summoned to parliament’s Government Oversight Committee on Tuesday night blamed the Finance Ministry for unpaid electricity bills to the State Electricity Company (STELCO).

STELCO Chief Technical Officer Dr Mohamed Zaid told the committee that local councils informed STELCO that funds allocated in their annual budgets were only enough to pay electricity bills for two or three months.

Zaid said discussions with the government have been ongoing since STELCO’s board made a decision to disconnect electricity from state institutions with large overdue bills.

The company was owed MVR 174 million (US$11.3 million) from various state institutions, he said.

While 78 percent of STELCO’s expenditure was on diesel, Dr Zaid revealed that the company owed MVR 132 million (US$8.6 million) for oil purchased on credit, including MVR 34 million (US$2.2 million) for oil bills currently overdue.

Among the institutions with the largest outstanding bills, the Male’ Health Corporation (MHC), which operates the Indira Gandhi Memorial Hospital (IGMH), owes STELCO MVR 31 million (US$2 million) for 20 months of unpaid bills while the Maldives Broadcasting Corporation (MBC) owes MVR 7.1 million (US$460,000) for the past five months.

Speaking at the committee, Male’ City Councillor Aimon Ismail said the Finance Ministry did not provide MVR 6.74 million (US$437,094) requested by the council for electricity costs in 2012. The Male’ City Council is responsible for paying electricity bills for mosques, public parks and street lights in the capital.

Meanwhile, newspaper Haveeru reported yesterday (Wednesday) that parliament’s Finance Committee decided to give the Finance Ministry a week to settle MBC’s outstanding bills in addition to asking the Auditor General’s Office to conduct a special performance audit of the state broadcaster.


Finance Committee debates prompt investigation of government finances

The Majlis Finance Committee has decided to table the issue of the alleged embezzlement of MVR24million ($US1.5million) by the Disaster Management Centre (DMC) as an emergency issue tomorrow, local media has reported.

Following the release of the Auditor General’s report on the DMC’s 2010 finance, released last week, there have reportedly been two arrests in relation to the case.

Head of the committee Ahmed Nazim called into question the government’s accounting system, as did the Auditor General, Niyaz Ibrahim, who criticised those in charge at the DMC.

Ibrahim has also decided to expedite the audit of the government’s finances after being questioned in the Finance Committee about an allegedly unauthorised MVR300million ($US19.4million) loan, taken by the government from the Bank of Maldives in June.

That is an assignment we had planned for this year. But after the MPs raised questions over the matter, we have sped up that process and the assignment has commenced and is ongoing. This exercise is intended to carry out a comprehensive public debt audit of the State,” Haveeru quoted Ibrahim as saying.

He said that the audit will cover five years of spending and admitted that it was his office’s responsibility to determine legality of state debt.

“Based on the ratios, it is the responsibility of the Auditor General to determine the vulnerability of the State. If you look at the practice of the rest of the world public debt audits will cover such issues,” Niyaz added.

“Debt is a highly sensitive issue. It is related to the sustainability of the State. In addition to determining the authenticity, there are some vulnerability ratios we look for in a public debt audit,” reported Haveeru.


Finance Minister estimates budget deficit will reach MVR6billion

Minister of Finance and Treasury Abdulla Jihad has told parliament’s Finance Committee that this year’s budget deficit can be expected to be double the original estimate of MVR3billion (US$195million), reported Haveeru.

Jihad is said to have explained that the bulk of  the deficit came from unpaid bills left over by the previous government, amounting to MVR2billion (US$130million).

During the committee’s meeting, which continues regardless of the status of the Majlis (currently suspended), Jihad also said that an additional MVR800million (US$52million) had been paid out from this year’s budget.

He said that this year’s revenue is expected to be MVR11.5billion (US$746million), whilst total expenditure is MVR14.6billion (US$948million).

Meanwhile, he reported that state spending this year, MVR9billion (US$590 million), had outstripped earnings by 28percent.

These figures represent an improvement on the Finance Committee’s earlier estimates which, in May, had anticipated a deficit of MVR9.1billion (US$590 million) after meeting with Jihad.

The committee is also reported to have given the go ahead to take out a further US$25million loan from India.


MPs reject dissolving media council

MPs voted 53-1 against a recommendation by the Finance Committee to dissolve the Maldives Media Council and transfer its mandate to the Maldives Broadcasting Commission (MBC).

While the vote was taken on July 4, the result was announced at today’s sitting of parliament.  It had not been officially declared due to disorder in the chamber that forced the sitting on July 4 to be called off.

The Finance Committee, chaired by Deputy Speaker Ahmed Nazim, recommended dissolving the media council after studying its audit report, which suggested that the independent regulatory body was not functioning as envisaged in the law.

Also at today’s sitting, MPs voted 33-18 to send a bill on freedom of assembly proposed by Independent MP Mohamed ‘Kutti’ Nasheed to a seven-member ad hoc committee for further review.

The list of MPs approved for the committee were MP ‘Reeko’ Moosa Manik from the opposition Maldivian Democratic Party (MDP), MP Moosa Zameer from the People’s Alliance (PA), MP Visam Ali and MP Abdulla Abdul Raheem from the Dhivehi Rayyithunge Party (DRP), Independent MP Ahmed Amir, MP Riyaz Rasheed from the Dhivehi Qaumee Party (DQP) and Abdulla Jabir from the Jumhooree Party (JP).

MPs meanwhile voted unanimously in favour of the Maldives becoming a member of the SAARC (South Asian Association for Regional Cooperation) Convention on Cooperation on Environment following a report submitted by the National Development Committee of parliament.

Speaker Abdulla Shahid adjourned today’s sitting at 2.30pm after quorum was lost during a debate on a report submitted by the Economic Committee after studying amendments proposed to the Tourism Act.

Today’s sitting was interrupted seven times due to loss of quorum before Speaker Abdulla Shahid brought the sitting to a close after quorum was lost for an eighth time.


Government must seek Majlis approval on Rf 300 million BML loan: Finance Committee

The government must obtain parliament’s approval on a Rf300 million (US$ 19.5 million) loan borrowed from the Bank of Maldives (BML) in May, People’s Majlis Counsellor General Fathmath Filza today told the Finance Committee.

The government had previously told local media the the BML loan was borrowed instead of US$65 million loan programme previously approved by the Majlis for budget support, and contends further approval from parliament was therefore not required.

However, Filza told the Finance Committee the US$65 million loan was only to be borrowed from foreign lenders and that the government has to seek parliamentary approval before borrowing from a local bank as per the Public Finance Act.

The Finance Committee has decided to forward the loan request to the Majlis floor for approval.

The opposition Maldivian Democratic Party (MDP) has submitted a resolution to the Majlis floor and to the Finance Committee to take action against the government for borrowing from BML at commercial interest rates without parliamentary approval.

Meanwhile, Dhivehi Rayyithunge Party (DRP) MP and deputy chair of the Finance committee Mohamed Nashiz has also raised concern over unapproved borrowing. “It’s a big issue that the government took out a loan without Majlis approval,” Nashiz said.  The DRP is represented in the coalition unity government of President Dr Mohamed Waheed Hassan.

Finance Minister Abdulla Jihad told Minivan News today the Rf 300 million loan, which he claims was borrowed at an interest rate of nine percent, was already in use.

“The loan had to be obtained urgently. The Indian government had pledged US$ 25 million as budget support, and when the money was not realized we had difficulties with the cash flow,” Jihad said.

However, Jihad said the government would respect the Finance Committee’s recommendations and submit “what is required of us to the Majlis for approval.”

This year’s budget deficit is estimated to surpass Rf9 billion (US$584million), around 27 percent of GDP.

The International Monetary Fund (IMF) in April has warned that economic growth and stability may be at risk in the medium term due to the large budget deficit and increase in expenditure.


Government’s Rf 300million BML loan to be investigated in Majlis

Maldivian Democratic Party (MDP) MP Ahmed Sameer has proposed that the Parliament take action against the government after it allegedly obtained a Rf 300 million (US$20 million) loan from the Bank of Maldives (BML) without consulting the legislature, local media has reported.

Sameer claims that the government had misled people by claiming it had sought parliamentary approval prior to obtaining the loan.

The issue of the loan was first discussed in the Majlis’ Finance Committee on June 25. After deliberating on the necessity for parliamentary approval for the loan, the committee opted to send the issue to the Counsellor General for clarification.

Kulhudufushi MP and Finance Committee member Abdul Ghafoor Moosa told Minivan News at the time that the loan could not be granted as it was not part of the state budget.

Moosa today said that the Counsellor General agreed with this opinion.

“The Counsellor General has said it should be approved by the full house. The government giving irresponsible reasons for its actions,” said Moosa.

Ahmed Nazim, head of the committee, was reported in Sun Online on June 25 as having told his committee that President Mohamed Waheed Hassan had sent the Majlis a letter on June 13 seeking permission to obtain the loan.

Two days after, however, Minister of Finance and Treasury Abdullah Jihad told the same news source that the loan had been issued in May at a time when parliament had been in recess.

“The loan had to be obtained urgently. The Parliament was in recess at the time, so we took the loan and sent the issue to the Parliament,” Jihad told Sun.

Moosa informed Minivan News that the Financial Committee did not go into recess, having business to deal with all year round.

Jihad told Sun that this type of budget support loan was accepted in the original budget and so he anticipated no legal issues with the move.

Jihad was not responding to phone calls at the time of press.

The Rf300 million budget support loan was intended to replace a $65million foreign loan that had been approved in the original 2012 budget.

Moosa claimed in June that the Rf300 million loan would be taken on a commercial basis, with high interest rates that would require the government to pay back Rf384million.

He said that the $65million loan, delayed due to incorrect paperwork, would have only been taxed at rates of around 2 percent.

Using these figures, the interest paid on the original loan would be Rf20million (US$1.3 million), whilst the interest on the new loan would be Rf84million (US$5.4million).

This year’s budget deficit is estimated to surpass Rf9 billion (US$584million) , around 27 percent of GDP

President’s Office Spokesperson Abbas Adil Riza said that the figure given by Moosa was incorrect, adding that the government was “not going to lose money on the deal”.

Abbas explained that Abdullah Jihad and other members of the current Finance Ministry had advised the government to take out the new loan as part of a “mop up” operation.


BML loan under Majlis scrutiny already issued says Finance Minister

Minister of Finance and Treasury Abdulla Jihad today told local media that an Rf300million government loan from the Bank of Maldives (BML) had already been issued, despite questions having been raised over whether the deal needed the Majlis’s approval.

After meeting to discuss the issue on Monday, the Majlis’s Finance Committee elected to pass the matter on to the Counsel General.

Committee member Abdul Ghafoor Moosa told Minivan News “We cannot grant it as it was not in the state budget.”

The loan was said to be a rufiyaa denominated replacement for a US$65million loan which had been approved in the original 2012 state budget.

Jihad told Haveeru that the deal had been rushed through the Finance Committee in May and June, when parliament was in recess.

“I believe that the loan had been sanctioned when the budget was approved,” Jihad told Haveeru.

The Finance Committee’s meetings continue even when the rest of the parliament is in recess.

The reason given for the BML budget support loan was that it was part of a “mop-up” operation intended to help curb inflation, although former Finance Minister Ahmed Inaz doutbed the efficacy of such a policy.


MTCC made annual loss of US$5.7 million, claims Finance Committee Chair

The Maldives Transport and Contracting Company (MTCC) recorded an annual loss of Rf89 million (US$5.7 million) for 2011, parliament’s Finance Committee Chair MP Ahmed Nazim revealed this week.

Local daily Haveeru reported that Nazim revealed the figure at yesterday’s Finance Committee meeting based on information requested through the parliament secretariat.

Nazim further claimed that the company finances showed losses of US$2.7 million with no documentation on the loss-making transactions.

However Nazim’s proposal to table the issue in the Finance Committee agenda did not receive support from a majority of MPs on the committee.

In lieu of inquiring into MTCC finances, Haveeru reported that the MPs urged the chairman to bring the report reviewing the government’s pay structure to the committee for a final decision before submission to the Majlis floor.


Majlis discusses cuts to MPs salaries and allowances

Proposals have been made in the Majlis’s Finance Committee to reduce the salary of MPs as well as to remove allowances received for committee work.

The proposal comes the day after the Anti Corruption Commission (ACC) announced its intention to investigate the decision to pay the committee an allowance of Rf20,000 (US$1,298) for the month of March – a month in which no committees convened, other than the Finance Committee itself.

Mohamed ‘Colonel’ Nasheed is reported by local media to have been both among the committee members who supported the decision to pay March’s allowance, as well as the progenitor of today’s proposal to reduce salaries and allowances.

Parliamentary activity was curtailed for the month of March after anti-government protesters and MPs blocked the official opening of the Majlis on March 1. The Majlis was officially opened amidst further protests on March 19 before reconvening on April 2.

Kulhudufushi MP Abdul Ghafoor Moosa voted against this decision.

“The administration sent a letter to the committee to make a decision on the payments. The public are not happy about this,” said Moosa.

“Some members of the committee argued that they were prepared to come into the meetings,” he continued.

Moosa said the ultimate decision on MPs pay and allowances would have to be made on the full floor of the house.

The ACC President Hassan Luthfee said that he had received a complaint about the committee allowances decision and was now investigating the matter, adding: “MPs should be more careful. They know about the financial problems in the country. They should be role models.”

Last month, Minister of Finance and Treasury Abdulla Jihad announced his intention to convene a pay review board in order to “harmonise” the pay of government employees in an attempt to reduce the state’s budget deficit.

He also announced his intention to reduce non-wage spending by 15 percent. Haveeru has today announced that the Majlis is cutting it’s budget by Rf25million (US$1.6million) , 11.2 percent of its total spending.

The Finance Committee predicted in May that the year’s deficit was likely to reach Rf9.1 billion (US$590 million), amounting to 27 percent of the country’s GDP.

Today’s proposals suggested reducing the pay of MPs to that of the highest paid civil servants.

The basic rate of pay for MPs is Rf42,500 (US$2,759) per month whilst the highest ranking civil servant receives Rf20500, according to local media reports. This is around the same amount MPs involved in committee work can expect to receive each month on top of their basic salary.

Transparency Maldives’ Aiman Rasheed explained that his organisation had been looking into the issue of MPs expenses since 2010.

Rasheed said that MPs already received a Rf20,000 (US$1,298) per month allowance in phone, travel, and living expenses, even for those MPs who live in the capital Male’.

“However, all MPs are paid the additional 20,000 regardless of actual expenses,” added Rasheed, “We strongly recommend that allowances to MPs must be released based on actual expenditure.”

“The 20k committee allowance is in addition to the basic salary and the living/phone/travel allowance. The justification by the Majlis for 20k is to incentivise MPs to attend committee meetings and to help their constituents,” said Rasheed.

“Some MPs made public statements that they would distribute the money among their constituents and that the money will go towards constituents’ medical bills etc. We at TM think that is plain corruption, abuse of authority and amounts to using state funds for campaigning.”

Regarding the decision to award the allowances for March, Rasheed noted that the Majlis’s regulations stipulate that MPs must attend 75 percent of their committee’s meeting to be eligible for the allowance.

Luthfee echoed these concerns, arguing that changes ought to be made to the way all allowances are distributed.

“In other countries such as the United Kingdom, the MPs travel and then submit expenses after spending,” said Luthfee.

Following a 2011 decision to reject a resolution to cut the controversial committee allowance bill, MP Ahmed Easa told Minivan News that, despite not supporting the allowance, he empathised with the needs many MPs had for additional finance.

”It’s true what they say – MPs have so much to do with their salary each month. People can’t even imagine how many calls a MP receives each day asking for help,” Easa explained.

“Anyone in trouble from any area will run to their MP first. MPs have to lend money to people in need of medication, even for reasons such as people coming to get money to pay the school fees of their children,” he continued.