Tag: loans

Parliament removes its requirement to authorise government loans

Parliament passed amendments to the Public Finance Act today reversing changes brought to the law in 2010 requiring parliamentary approval for obtaining loans, providing sovereign guarantees, and leasing or selling state assets.

During the final debate at today’s sitting of the People’s Majlis, opposition Maldivian Democratic Party (MDP) MP Ibrahim Mohamed Solih said he believed the government should have “the power and discretion” to obtain loans and conduct its programmes.

However, the MDP parliamentary group leader objected to scrapping a provision in the public finance law that prohibits expenditures in excess of funds allocated in the annual budget.

If Article 34(b) is abolished, Solih said the finance minister would not have to ensure that spending was in line with the budget approved by parliament.

If MVR800 million (US$51.8 million) was allocated to the police, Solih explained that the finance minister could approve MVR1 billion (US$64.8 million) for the institution.

“The purpose of passing the budget would be completely lost if this article is abolished,” he said.

Following the debate, the government-sponsored amendments (Dhivehi) were passed with 41 votes in favour, 25 votes against, and one abstention.

While Jumhooree Party MP Hussain Mohamed proposed adding clauses to require the government to provide information concerning loans and financial assistance to parliament within 45 days, neither amendment passed after pro-government MPs voted against the proposals.

The MP for Mathiveri had argued that the current law would not hamper the daily functions of the government as a decision to take a loan or provide a sovereign guarantee would not be made “one morning at the office”.

On the issue of delays in securing parliamentary approval, Hussain noted that the economic affairs committee completed its review of the amendments in two and a half hours.

“So what is the delay here? [The amendments] will be passed today. It has probably been just a week since it was submitted,” he said, noting that pro-government MPs were in the majority.

He further urged pro-government MPs to read Majlis minutes from 2010 to see how then-opposition leaders spoke in favour of the amendments.

Progressive Party of Maldives (PPM) MP Jameel Usman meanwhile said parliament unduly assuming executive powers would pose difficulties in providing services to the public.

“Our responsibility should not be stopping things but monitoring,” he said.

Restrictive

Last week, Finance Minister Abdulla Jihad told parliament’s economic affairs committee that the government faced serious difficulties due to the requirement to seek parliamentary approval before obtaining loans.

Similar requirements did not exist in any other country, he added.

Jihad referred to a loan obtained from the Bank of Maldives during President Dr Mohamed Waheed’s administration without parliamentary approval as Majlis was in recess at the time and the funds were needed to pay salaries of government employees.

In December 2013, the Auditor General’s Office revealed that President Waheed’s administration violated finance laws in securing a domestic loan worth MVR300 million (US$ 19.45 million) from the Bank of Maldives (BML) for budget support.

Meanwhile, in May, President Abdulla Yameen suggested that the requirements of the public finance law were hampering the functioning of the executive.

The government was forced to seek parliamentary approval “even for a MVR1,000 (US$65) loan,” he said.

Yameen contended that laws imposing “various restrictions” on the executive were passed by the previous People’s Majlis due to the “irresponsibility” of the former head of government.

The passage of the amendments in 2010 prompted the en masse resignation of former President Mohamed Nasheed’s cabinet on June 29, 2010 in protest of the opposition’s alleged obstruction and “scorched earth” policy.

While former Special Majlis MP Ibrahim Ismail ‘Ibra’ characterised the amendments as the “grand finale of decimating the executive,” the Nasheed administration filed a case at the Supreme Court contesting the constitutionality of some provisions.

Yameen, who was leader of the minority opposition People’s Alliance at the time, said Nasheed’s “selling off of state assets and giving up uninhabited islands” had prompted the opposition’s actions.

“When many such actions that were harmful to the public occurred, a group of people advocating as the people’s representatives – myself included – determined things that cannot be done without a say of the parliament and passed a law called the Public Finance Act to hold the government accountable,” he had said in May.

Following the controversial transfer of power in February 2012, the new administration – made up of former opposition parties – sought to reverse the restrictions concerning the sale and lease of state properties.


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Government hampered by “restrictive” public finance law, says President Yameen

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Government hampered by “restrictive” public finance law, says President Yameen

Amendments brought to the Public Finance Act by the opposition-controlled parliament during the three-year tenure of former President Mohamed Nasheed are posing challenges and difficulties to successive administrations, President Abdulla Yameen has said.

The amendments (Dhivehi) voted through in June 2010 stipulated that the executive must seek parliamentary approval before either obtaining foreign loans or leasing state property. Nasheed at the time declared that the law would make it “impossible for the government to function.”

Addressing supporters in the island of Naifaru in Lhaviyani atoll Sunday night (May 4),Yameen claimed that laws imposing “various restrictions” on the executive were passed by the People’s Majlis due to the “irresponsibility” of the former head of government.

But former President Dr Mohamed Waheed had also faced “difficulties” in governing after succeeding Nasheed in February 2012, Yameen said adding: “This is the problem we are facing as well.”

The executive was still forced to seek parliamentary approval “even for a MVR1,000 (US$65) loan,” he said.

“Scorched earth” tactics

The passage of the amendments in 2010 prompted the en masse resignation of President Nasheed’s cabinet on June 29 in protest of the opposition’s alleged obstruction and “scorched earth” policy.

While former Special Majlis MP Ibrahim Ismail ‘Ibra’ characterised the amendments as the “grand finale of decimating the executive” by wresting control from the executive, the Nasheed administration filed a case at the Supreme Court contesting the constitutionality of some provisions.

Yameen, who was leader of the minority opposition People’s Alliance at the time, said Nasheed’s “selling off of state assets and giving up uninhabited islands” had prompted the opposition’s actions.

“When many such actions that were harmful to the public occurred, a group of people advocating as the people’s representatives – myself included – determined things that cannot be done without a say of the parliament and passed a law called the Public Finance Act to hold the government accountable,” he said.

Following the controversial transfer of power in February 2012, the new administration – made up of former opposition parties – sought to reverse the restrictions concerning the sale and lease of state properties.

In December 2013, the Auditor General’s Office revealed that President Waheed’s administration violated finance laws in securing a domestic loan worth MVR300 million (US$ 19.45 million) from the Bank of Maldives (BML) for budget support.

Yameen also noted that he inherited an MVR30 billion (US$2 billion) national debt when he assumed office in November.

“That means to reach the ground I have to travel 30,000 million feet,” he said.

Coalition discontent

Contrary to Nasheed and Waheed, Yameen said he did not anticipate difficulties due to non-cooperation from the legislature as the Progressive Coalition – comprising of the ruling Progressive Party of Maldives (PPM) and coalition partners Jumhooree Party (JP) and Maldives Development Alliance (MDA) – has secured a comfortable majority in the incoming 18th People’s Majlis.

But Yameen has admitted to “some discontent” within the ruling coalition due to a dispute over which party should control the seat of Majlis Speaker.

“The public should work to change this discontent among us to contentment,” he said, adding that constituents should demand the cooperation of opposition MPs as well as JP MPs.

Yameen suggested that the public voted for candidates fielded by the JP and MDA due to the trust the Maldivian people had in PPM leader, former President Maumoon Abdul Gayoom.

Stressing the importance of the public’s backing and support for the government, Yameen urged constituents to “constantly remind” their MPs that they would not have “a second chance” if they vote against government proposals.

As the public voted for a change in both the presidential and parliamentary elections with high hopes for economic progress, Yameen said that the government’s policies and development projects should not be hindered due to problems within the coalition.

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Finance Ministry’s MVR 300 million budget-support loan “illegal”

A report by the by the Auditor General has revealed that President Dr Mohamed Waheed’s administration violated finance laws in securing a domestic loan worth MVR300 million (US$ 19.45 million) from the Bank of Maldives (BML) as part of its budget-support program.

The report (dhivehi) – based on the audit published at the Auditor General’s (AG) website last Sunday – claimed then Finance Minister Abdulla Jihad had not obtained the required approval from the president and the parliament.

Jihad has hit back, claiming that the loan was taken to avoid financial disaster. He also suggested that the mandated processes for approving government loans had only been introduced to thwart the MDP government in 2010.

The audit was conducted following a request from the parliament’s Public Finance Committee, after opposition Maldivian Democratic Party (MDP) MP Ahmed Sameer filed the matter at the committee in July 2012.

Section 5 of the Public Finance Act 2006 (as amended in 2010) states that any loan or credit facility which either the government or a government-owned corporation wishes to obtain, can be taken only after presidential and parliamentary approval.

The audit report stated that despite the legal requirement, Jihad – recently reappointed to the same position by the recently elected President Abdulla Yameen – had signed the letter of sanction on May 28, 2012, one day before the request for approval of the loan was sent to President Waheed.

According to the report, Jihad signed the final loan agreement with BML a day later on May 29, 2012.

A measure taken to prevent a financial disaster

In his defense, the Finance Minister has told local media that the loan was taken out of necessity, to prevent the state from financial disaster.

Jihad claimed that during May 2012, the government faced enormous difficulties following a decline in cash flow. By the end of the month in question, the government had almost exhausted its finances, said Jihad.

Furthermore, the minister claimed that he had consulted with President Waheed and decided to take the loan, but that the parliament had gone to recess.

“At that critical time, we had no other option. That was a measure that had to be taken in order to keep the state running. Hadn’t we done that, the state employees would not have been paid the month’s wages. We ought to consider the situation at the time. At that time we weren’t even able to obtain a loan from the Maldives Monetary Authority (MMA),” Jihad told Haveeru.

Blasting the current requirement of parliamentary approval before taking loans, Jihad claimed that no other modern democratic states followed such a practice. Because of the requirement, the government had lost several loans and had become a disgrace in front of most of the international financial organisations, Jihad added.

He also admitted that the amendment brought to the Public Finance Act in 2010 during the administration of former President Mohamed Nasheed was intended to disrupt the government’s functioning.

President Nasheed at the time had no choice but to ratify the amendment as his party was outnumbered when the vote was taken in parliament. The then-opposition now comprises most of the current governing coalition.

Jihad also criticized the AG’s report itself: “I am the Minister. But when the report was compiled, [Auditor General] had asked nothing from me. Of what had happened? So how can this report be accurate?”

Shortcomings

The report also revealed that although the government had formally sought parliamentary approval of the loan on June 13, 2012, by this date the Finance Ministry had already withdrawn the first tranche – MVR200 million (US$ 12.97 million) out of the MVR300 million.

The government withdrew the remainder on June 20, 2012, the report stated.

Furthermore, the report claimed that in the letter sent to the president by Jihad, approval was sought for the loan with a request that it be made part of the US$65 million (MVR 1 billion) overseas loan that gained parliamentary approval as part of the 2012 national budget.

The report claimed that the conditions for the domestic loan from BML, and that of the proposed US$65 million overseas loan differed significantly.

Among the significant differences highlighted in the report, parliament had approved the US$65 million overseas loan with an interest rate of 2 percent while the BML loan had an interest rate of 9 percent subject to annual reviews.

Furthermore, repayment of the US$65 million loan was to commence within 10 years, while the BML loan required the repayment within just two years.

“Therefore, the loan of MVR300 million taken from the Bank of Maldives in the year 2012 had been taken without the approval of the parliament and the president, disregarding the decisions made by the legislature and the Public Finance Act,” concluded the report.

The Auditor General furthermore requested the authorities to take action against those found responsible for the misconduct.

The current government meanwhile has sought for the approval of a US$29 million (MVR 447 million) budget-support loan that is to be taken from the Bank of Ceylon, for the 2014 state budget.

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Majlis approves US$11,122,700 loan for Fuvahmulah water and sewerage

The People’s Majlis has approved a loan worth US$11,122.,700 to establish a water and sewerage system on Fuvahmulah Island.

The Kuwait fund provided loan has a grace period of four years and is to be repaid over 24 years.

Fuvahmulah Island located in southern Maldives has a population of 11,140 people.

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Budget shortfall leads Maldives to seek $US29.4 million Bank of Ceylon loan

President Mohamed Waheed has requested parliament approval to obtain a US$29.4 million loan from the Bank of Ceylon to finance the government’s budget and manage cash flow.

The Ministry of Finance and Treasury is seeking to secure the loan as a way to “enforce” the 2013 budget approved by parliament, stated a letter from the President’s Office read during a parliament session held on Tuesday (August 13).

The Finance Ministry informed the President’s Office that the Bank of Ceylon would provide the Maldives’ government a loan of US$29.4 million, at a six percent interest rate, to be repaid within six years in monthly payments of US$490,000, according to local media.

The Government of Maldives believes the short term loan offers “good terms” and will provide the support necessary to finance the state budget and cash flow. The President’s Office letter also noted that the graduation of the Maldives from least developed country status has made it “extremely difficult” to obtain loans with low interest rates.

Previously, upon parliament’s approval of the 2013 budget, it was agreed that the state could not take out loans with interest rates that exceed seven percent.

The President’s Office Bank of Ceylon loan request has been forwarded to parliament’s finance committee.

Foreign loans for “fiscal problems”

In 2012, President Waheed reportedly said he would not resort to borrowing from foreign governments in order to finance government activities.

“I will not try to run the government by securing huge loans from foreign parties. We are trying to spend from what we earn,” he was reported to have told the people of Nilandhoo Island.

However, the government has sought a number of foreign loans to supplement the state budget.

Last month, the government confirmed it was in discussions with Saudi Arabia, seeking a long-term, low interest credit facility of US$300 million to help overcome “fiscal problems”.

President’s Office Spokesperson Masood Imad confirmed President Waheed had held discussions with senior Saudi Arabian dignitaries including Crown Prince Salman bin Abdulaziz Al Saud over the proposed credit facility, during his recent visit to the country.

“The president has initiated the talks so it is just a matter of working out the details now,” Masood said, explaining that the funds would be used for “budget support” and development projects.

In September 2012, President Waheed told Reuters that China will grant the Maldives US$500 million (MVR7.7billion) in loans during his state visit to the country.

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

China’s aid was hoped to provide an immediate salve to the government’s financial ailments, which at the time included a MVR 9.1 billion ($590million) budget deficit.

Additionally, the government was seeking a US$25 million state loan from India required to support the state budget for the remainder of 2012. The loan was delayed after the Maldives’ government failed to submit the requested paperwork, a diplomatic source from the Indian High Commission in the Maldives previously revealed.

The US$25 million loan was agreed as part of the $US100 million standby credit facility signed with Prime Minister Manmohan Singh in November 2011.

It is not clear whether the foreign loans from India and China have been received, or whether parliament has approved the state obtaining loans from Saudi Arabia or Sri Lanka’s Bank of Ceylon.

Finance Minister Abdulla Jihad as well as Deputy Speaker, Parliamentary Financial Committee Head, and People’s Alliance (PA) MP Ahmed Nazim were not responding to calls at time of press.

Failure to fill budgetary gaps

Finance Minister Abdulla Jihad claimed back in late December 2012 that the MVR 15.3 billion (US$992 million) state budget approved by parliament might not last until the end of 2013 – requiring supplementary finance for the state.

In April 2013, Jihad sought authorisation from parliament to divert MVR 650 million (US$42 million) allocated for infrastructure projects in the budget to cover recurrent expenditures.

Jihad warned that government offices and independent institutions might be unable to pay salaries orelectricity and phone bills if funds were not transferred from the MVR 1.8 billion (US$117 million) Public Sector Investment Programme (PSIP).

Earlier in April, Jihad also announced that the government had decided to delay all new development projects that were to be financed out of the state budget due to shortfalls in revenue.

The decision to suspend new projects was revealed after Housing Minister Dr Mohamed Muiz told local media at the time that he had been instructed not to commence any further infrastructure projects included in the 2013 budget, such as harbour construction or land reclamation.

“Reckless financial management”: MDP

In July, Maldivian Democratic Party (MDP) MP and Spokesperson Hamid Abdul Ghafoor said that the heavily partisan parliament now effectively controlled state finances as a result of former opposition politicians – now part of President Waheed’s government – imposing tighter spending restrictions on former President Mohamed Nasheed’s administration.

Ghafoor argued that with the MDP failing to recognise the legitimacy of the present government due to the controversial transfer of power last February, he did not believe there would be support for approving the credit agreement with Saudi Arabia due to the government’s existing extravagant borrowing levels.

The party accused the current government of reckless financial management, pointing to a potential US$1.4 billion compensation bill facing the state for deciding last year to abruptly terminate a US$511 million airport development contract agreed with infrastructure group GMR.

The compensation claim amounts to four times that of the Maldives’ current state reserves should it be awarded by a Singapore court overhearing arbitration hearings between GMR and the government.

“Since we do not see this government as legitimate, we do not see why we should support them,” he said. “They have put us into debt with their handling of the airport development and another bill for a border control system.”

Earlier in July, Malaysian security firm Nexbis invoiced the Department of Immigration and Emigration for US$2.8 million (MVR 43 million) for the installation and operation of its border control system technology in the country, in line with a concession agreement signed in 2010.

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MTCC and government finalising agreement for construction of 22 harbours

The Maldives Transport and Contracting Company (MTCC) is in talks with the government to finalise an agreement to construct 22 harbours under a so-called contractor finance policy.

MTCC CEO Dr Ahmed Adham has told local media that the government has agreed to guarantee a loan of US$30 million required for undertaking the project, with the state then having a five year grace period to pay for the construction under the proposed policy.

“Despite the government guarantee, we will be repaying the loan. In addition we are currently engaged in discussions with our equipment partners to come to an agreement,” Adham was quoted as saying by newspaper Haveeru.

Reports over the new agreement come days after the government announced it would be delaying implementation of any new development projects financed out of the state budget due to shortfalls in its revenue.

The decision to suspend new projects was revealed earlier this week by Housing Minister Dr Mohamed Muiz during the signing of contracts to build harbours in four islands.

Muiz said at the time that he was instructed by the finance ministry not to commence any further infrastructure projects included in the 2013 budget, such as harbour construction or land reclamation.

Speaking to Minivan News today, Finance Minister Abdulla Jihad said the reported agreement set to be signed between the government and MTCC was not related to the decision to delay starting any further development projects.

Jihad added that the harbour developments currently under discussion as part of the contractor finance policy had already been included within the state budget.

“It is just the mode of financing that is different,” he said today.

According to local media, the MTCC plans to sign the new harbour agreement with the government next week.

There have been “constraints” to obtain funds for projects already awarded by the government, however Adham Haveeru he was “confident the government will hold up its end in the new contracts and make the progressive payments.”

“We are presently carrying out projects under progressive payment policy. Government has assured us that it would make the payments without interruption.”

Currently the MTCC is conducting work on harbor projects for 17 government-assigned islands.

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Education Ministry warns of student loan shortage

The Education Ministry may be unable to issue loans to 1000 students due to its “significantly lower” budget, Education Minister Dr Asim Ahmed has told local media.

Ahmed emphasised that the Education Ministry would continue to issue loans, while students selected for the loan scheme in 2012 would still receive funds. Only 526 students applied in 2012, reported Haveeru.

The number of student loans available in 2013 remains unclear, as discussions with the Finance Ministry are ongoing. The Education Ministry previously announced loan applications would become available in February.

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India grants further US$25million to Maldives

India has granted a further US$25million to the Maldives as part of the $US100million standby credit facility agreed during last November’s official visit from Prime Minister Manmoham Singh.

Indian High Commissioner D M Mulay signed the agreement with Minister of Finance and Treasury Abdulla Jihad at the Indian High Commission, local media reported.

Mulay, who was not responding to calls at the time of press, said that the deal represented the third instalment of the credit facility, with the previous two instalments having amounted to US$50million.

The previous tranche of US$30 million was released following President Waheed’s first official visit to India in May.

Mulay is also reported to have said that the rest of the promised credit will soon be handed to the Maldivian government:  “The paperwork on the agreement is being processed now, the amount will soon be awarded to the Maldives,” Haveeru quoted Mulay.

A standby line of credit is normally forwarded to countries which have reached macroeconomic sustainability but experience short term financing issues.

The release of this credit comes just days after Waheed completed his first official state visit to China.

During this trip, Waheed finalised agreements for a US$500 million Chinese loan with the assurance of more aid available when needed.

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 told Minivan News last week that, despite securing this money from China, the government would still be considering austerity measures which are being considered in order to reduce the state’s budget deficit.

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

India has traditionally enjoyed close ties with the Maldives, although there have been increasingly strong links between the Maldives and China, largely due to the number of Chinese tourists visiting the Indian Ocean nation.

A Chinese embassy opened in Male’ in time for the opening of the SAARC summit last November, reciprocating the opening of a Maldivian mission in Beijing in 2007.

Indian officials were reported at the time as having concern that the move was part of China’s “string of pearls” policy which supposedly involves Chinese attempts at naval expansion into the Indian Ocean.

After the awarding of the Chinese loan, however, former Foreign Minister and current UN Special Rapporteur to Iran, Dr Ahmed Shaheed was keen to play down any suggestions that the Maldives was about to significantly change its foreign policy priorities.

“This is very much in keeping with past policy. The lines so far drawn have demonstrated that the Maldives remains primarily SAARC focused, followed by trading partners in the EU and Singapore. China has moved into this second category,” he added.

“Nothing will change the fact that we are only 200 miles from Trivandrum,” said Shaheed.

When asked upon his recent return from Sri Lanka what the Maldives’ policy was regarding Sino-Indian competition in the region, President Waheed is said to have responded that the policy of a small nation like the Maldives ought to be to avoid too great an involvement in geopolitics.

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Civil servants to receive Rf150,000, scholarships, SME loans for voluntary redundancy

Cabinet yesterday launched a program to encourage civil servants to leave the government and enter the private sector or further their education.

Under the scheme, civil servants and government employees will be eligible for one of four retirement incentive packages: no assistance, a one time payment of Rf 150,000 (US$11,700), a payment of Rf 150,000 and priority in the small and medium enterprises loan scheme (for those 18-50 years of age), or a lump sum of Rf 200,000 (US$15,600) and priority in government training and scholarship programmes (for those 18-40 years of age).

In addition, government employees above the age of 55 who retire voluntarily will be given the same benefits as those released by the Civil Service Commission (CSC) at the mandatory retirement age of 65.

The deadline to apply for the program with the Ministry of Finance is May 31, 2011.

The move is likely to win the government further favour with the International Monetary Fund (IMF), following its managed float of the rufiya and passing of several tax bills through parliament, including the tourism goods and services tax (TGST) and business profit tax.

However international financial organisations such as the World bank and International Monetary Fund (IMF) have regarded the country’s bloated public wage bill as the key contributor to its 20-21 percent budget deficit, arguing that the country must reduce its expenditure as well as increase its revenue.

The deficit exploded on the back of a 400 percent increase in the government’s wage bill between 2004 and 2009, with tremendous growth between 2007 and 2009. On paper, the government increased average salaries from Rf3000 to Rf11,000 and boosted the size of the civil service from 24,000 to 32,000 people – 11 percent of the total population of the country – doubling government spending from 35 percent of GDP to 60 percent from 2004 to 2006.

Political maneuverings by the opposition last year forced the government to rescind pay cuts of 15 percent, leading the IMF to comment that “significant policy slippages” were threatening the country’s economic sustainability.

Several political skirmishes over pay cuts between the Finance Ministry and Civil Service Commission (CSC) ended in court last year, with permanent secretaries of Ministries at one stage submitting multiple wage forms in an effort to appease both sides.

Head of the CSC Mohamed Fahmy told Minivan News that the commission was “very positive” about the voluntary redundancy program.

“This is an opportunity particularly for young people to advance their studies and skills,” he suggested.

“We can’t yet say how people will react, but definitely the package for people 55 years and over is very good. I think this is positive encouragement – scholarships are hard to come by, and many parents are not in a position to fund their children’s education.”

The President’s Press Secretary Mohamed Zuhair claimed that the potential short term costs of the scheme “are not relatively high compared to the benefits in the long term.”

“We need to trim down the civil service to reduce state expenditure and have a healthier private sector,” he said. “Few other countries apart from North Korea employ such a high percentage of their population in government.”

Zuhair dismissed the possibility that such an incentive program would lead to a ministerial ‘brain drain’, as talented staff with prospects outside government rushed to leave the civil service.

“The civil service will continue to provide benefits such as long term security and upward mobility – I don’t think there will be a rush,” he predicted.

Political appointees would also be eligible for the program, he added, however following the replacement of government-appointed island councillors by elected representatives, “there are not more than about 170 appointees”.

In comparison, the Civil Service Commission (CSC) has 21,000 staff under its mandate, including 19,000 permanent staff and 2000 contractors.

The remaining public sector employers fall under an assortment of 100 percent government-owned corporations, particularly prevalent in the medical, education and media sectors, a loophole that allows the government to hire-and-fire staff without being subject to the jurisdiction of the CSC.

“Staff of the corporations are no longer civil servants but are still uniformed servants of the state,” Zuhair explained.

Yesterday’s move to incentivise the departure of civil servants is likely to draw further support from the IMF, which has finished its Article IV consultation and may be weighing up the provision of further support.

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