Maldives’ currency reserves “dwindling to critical levels”: World Bank

Currency reserves in the Maldives have “dwindled to critical levels”, according to the World Bank’s bi-annual South Asia Economic Focus report.

The report highlighted that growth in South Asian countries – including the Maldives – is still below pre-economic crisis levels.

“Much of the recent slowdown in economic growth can be attributed to stagnating investment,” the World Bank stated in its findings. “Economic recovery could falter in the absence of a stronger investment climate.”

South Asian countries are “now more vulnerable” due to widening current account balances, slowing foreign direct investment, and persistently high inflation that has “limited the ability” of central banks to counter economic downturn via monetary policies.

Rising imports, and the Maldives dependency on those imports, also leaves the country more vulnerable to commodity price increases, argued the findings.

“Countries will need to improve their business climate to attract the private sector investment needed for these new entrants to find productive jobs, thereby reducing poverty and boosting shared prosperity,” said Martin Rama, Chief Economist for the South Asia Region at the World Bank.

Improving tax revenue collection and curbing energy subsidies are required for further progress to be achieved.

Maldives Monetary Authority (MMA) statistics released in January 2013 indicated that gross state reserves have shrunk to MVR 4.9 billion (US$317.7 million).

This is essentially only enough for one month of imports.

Between November and December 2012, reserves dropped 14 percent, or MVR 849.7 million (US$55 million). In comparison with the start of 2012 – when the State reserve was MVR 5.3 billion (US$343 million) – January 2013 had seen an eight percent decline.

MMA statistics explained that the reason for the downward slide at the end of 2012 was due to depletion of state funds in local and foreign banks, according to local media.

The ballooning 2012 budget deficit alerted the International Monetary Fund (IMF), which previously expressed concern that without raising revenue and cutting expenditures, the country risked exhausting its international reserves and sparking an economic crisis.

Finance Minister Abdulla Jihad told MPs in December 2012 that additional revenue was needed to finance the fiscal deficit and rein in soaring public debt, which was projected to reach MVR 31 billion (US$2 billion) or 82 percent of GDP by the end of 2013.

The governor of the country’s central bank said back in May 2012 that the Maldives was facing its worst economic crisis in recent memory.

Fiscal responsibility

Despite parliament recently rejecting an increased airport service charge, legislation on fiscal responsibility submitted in 2011 by former President Mohamed Nasheed’s government was passed with 42 votes in favour and 10 against at a sitting of parliament on April 15.

If the bill is ratified, the government would be prohibited by law from obtaining loans after January 1, 2016, in order to finance recurrent expenditure or loan repayments.

The bill also sets limits on government spending and public debt based on the proportion of GDP, mandating the state to not allow public debt to exceed 60 percent of GDP.

Borrowing from the central bank or MMA should not exceed seven percent of the projected revenue for the year, while such loans would have to be paid back in a six-month period under additional finance conditions outlined under the recently approved legislation.

Moreover, a statement outlining the government’s mid-term fiscal policy must be submitted annually to parliament at the end of the financial year in July.

The current government has pointed the finger at the previous administration for the current budgetary issues, whilst simultaneously implementing a series of policies which have added to its financial obligations.

These deficit expanding policies have included promoting 1000 police officers, the hiring of 110 new police officers, and a reinterpretation of the legal provision for the payment of resort island lease extensions which had cost the government MVR92.4million (US$6million) already in comparison with the same point last year.

The government also chose to reintroduce MVR100 million (US$6.5 million) fishing subsidies and to reimburse MVR443.7 million (US$28.8 million) in civil servant salaries, reversing measures implemented during the previous government’s own austerity drive.

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Pro-Sharia march held in Male’

Men and women of various ages marched through the streets of Male’ yesterday (April 19), calling for Islamic Sharia to be fully implemented in the Maldives.

Yesterday’s march, which organisers claimed had no political backing, was said to have been led by a group of young people calling for Sharia to be fully implemented to protect the Maldives from “calamities” that it is presently facing, according to local media.

However, one local religious NGO has argued that Maldivian society was not presently ready to undergo such radical reforms to the nation’s legal system, arguing that any changes would need to be made gradually over a long period of time.

Commencing yesterday at 4:30pm by the social centre in the capital, the pro-Sharia march concluded just before 6:00pm at the artificial beach area.

A small number of demonstrators were in attendance, reported the Sun Online news website. Organisers have pledged that further pro-Sharia marches were anticipated in future.

Minister of Islamic Affairs Sheikh Mohamed Shaheem Ali Saeed and State Islamic Minister Mohamed Didi were not responding to calls at the time of press.

“Long process”

Co-founder of the Islamic Foundation of Maldives (IFM) Ibrahim Nazim, speaking in a personal capacity, told Minivan News that he believed demonstrators may have been affiliated with fellow religious NGOs in the country.

Nazim said key figures behind the demonstration would have likely been religious conservatives, who in some cases may have held more “radical” views of Islam.

In addressing the key aims of the march, he added that from a personal perspective, Maldivian society was not presently an environment conducive for Islamic Sharia to be implemented outright.

Nazim argued that implementing Sharia law correctly would be a long process for the country. He took the example of other Islamic nations such as Pakistan that had sought to implement a complete adherence to Sharia law in a short period of time, resulting in power struggles and other political complications as a result.

“This is not something we can just implement overnight, we will require people to change their attitudes before we are ready for such a change,” he suggested. “It will be a long process for the country.”

When contacted about the implementation of Sharia in the Maldives, President’s Office Media Secretary Masood Imad today recommended Minivan News contact the Islamic Ministry over religious issues concerning the state.

“I think it would be best to speak to the Islamic Ministry on this,” Masood said.

Meanwhile, a senior figure serving within the current government of President Dr Mohamed Waheed – speaking on condition of anonymity – argued that any significant changes to the country’s faith would always have to be made gradually and could not be made in a short period of time.

The source argued that the previous government of former President Mohamed Nasheed – which claimed to favour what it called a “more moderate and tolerant” form of Islam – had attempted to bring changes to the country’s perception of faith and religious conservatism in too short a period of time.

While claiming to personally favour a “more tolerant” interpretation of Islam, the source argued that the resulting opposition to the former government’s religious stance had likely led to the controversial transfer of power that saw former President Nasheed resign on February 7, 2012.  His resignation came on the back of a mutiny among sections of the police and military.

Islamic Sharia in the Maldives

Under article 142 of the Maldives’ Constitution, the judiciary is presently required to looked to turn to Islamic Sharia in any matters where the Constitution or the law is silent.

To this end, the country’s courts have in certain cases granted the death sentence to severe crimes such as murder, while also using punishments like flogging in certain sexual offence cases.

However, the acting Head of State under each of the last three governments has commuted death sentences to life sentences in every single case.

The last person to be judicially executed in the Maldives was Hakim Didi, who was executed by firing squad in 1953 after being found guilty of conspiracy to murder using black magic.

Legal Reform

In December 2012, former Attorney General Azima Shukoor drafted a bill outlining how the death sentence should be executed in the Maldives as part of ongoing consultations on enacting such a punishment.

Lethal injection was identified as the state’s preferred method of capital punishment in the bill, while further consultations were being taken on possibly removing the serving Head of State’s right to commute death sentences upheld by the Supreme Court.

Earlier this year, the government of President Dr Mohamed Waheed had pledged to review the possibility of legal reforms to bring an end to the use of punishments like flogging in the country’s justice system.

Addressing the scale of these potential reforms, President’s Office Media Secretary Masood said last month that all authorities involved in the process would have to tread “a very fine line” in order to tackle long standing “traditions” and beliefs in the country.

“Reforms must be undertaken, but this must be done gradually considering we are dealing with a process embedded in society,” he said, discussing the government’s commitments to bring an end to sentences like flogging. “A certain amount of compromise may be needed.”

The wider Maldives legal system has itself been brought under the spotlight after former President Nasheed controversially detained the Criminal Court Chief Judge last year.

Nasheed’s government argued the decision was necessary as the judge in question had become a threat to “national security” after ordering investigations into his own alleged misconduct halted.

Nasheed is presently facing trial in the country over the abduction of the judge.

Following the commencement of the trial, Gabriela Knaul, United Nations Special Rapporteur on the Independence of Judges and Lawyers, earlier this year raised several concerns about the effectiveness of the wider Maldives legal system following a fact-finding mission.

Knaul stated back in February that upon conclusion of her mission meetings, she had found that the concept of independence of the judiciary has been “misconstrued and misinterpreted” by all actors, including the judiciary itself, in the Maldives.

Addendum: This article earlier attributed views of Co-founder of the Islamic Foundation of Maldives (IFM) Ibrahim Nazim to the organisation. He has subsequently clarified that his comments were made in a personal capacity.

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Association warns public against spear-fishing at public swimming area

The Swimming Association of Maldives has warned individuals against using the pubic swimming track in Male’ for spear-fishing.

In a statement released today, the association stated that it had received complaints that members of the public have been using the area for spear fishing and other related activities.  It argued that activities such as these had resulted in some people in the area swimming around with sharp metal rods and other dangerous objects.

“As this concerns the safety of many leisure swimmers who use the track during night and day, as a precautionary action, we call on all those who use the area to be more responsible and to refrain from such activities,” the Swimming Association of the Maldives stated.

In addition to the general public, the swimming track is often used for training courses by the Swimming Association of the Maldives, and other private clubs and societies.

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Speaker Shahid confirms switch to opposition MDP

Parliamentary Speaker Abdulla Shahid has today joined the opposition Maldivian Democratic Party (MDP) – days after resigning from the government-aligned Dhivehi Rayyithunge Party (DRP).

Following ongoing media speculation over the last week that the speaker was considering defecting to the MDP, Shahid today confirmed via his Twitter account that he had changed his political allegiance over concerns about the direction of the country’s democratic transition.


Shahid did not elaborate further when asked by Minivan News today if he believed his decision to switch parties would potentially lead to government-aligned MPs reconsidering their support for his speaker role.

“Strong and resolute”

Shahid’s former party, the DRP, today said that it did not wish to comment on the personal decision of someone who was no longer a member of the party.

DRP Deputy Leader Abdulla Mausoom told Minivan News that despite the defection of the speaker, the party would “remain solid, strong and resolute”.

Mausoom added that the government-aligned party did not presently have any intention to pursue a no-confidence motion against the speaker as a result of him switching parties.

“In the past, most of the no-confidence motions have been conducted by either the MDP or the Progressive Party of Maldives (PPM),” he claimed.

Mausoom alleged that previous no-confidence motions submitted from the two parties had been undertaken as a means of seeking vengeance against the speaker or other political figures – something he claimed the DRP would not do.

“We have not initiated a no-confidence motion. We believe that no confidence should only be taken on an issue of national importance,” he said.

However, he claimed that in cases where any politician – whether a speaker or cabinet minister – was deemed to be compromising national issues, then the party “would not hesitate” to take action.

Abdulla Yameen, Parliamentary Group Leader of the government-aligned PPM – the country’s second largest political party after the MDP and minority party of parliament – did not respond to calls from Minivan News about the speaker’s switch today.

Earlier this week, PPM MP Ahmed Nihan said he had worked with Shahid for many years and personally found him to be very capable in his position as speaker.

However, he added that he was not sure how his fellow party members or other government-aligned MPs might view a decision to switch to the opposition.

“Ideological shift”

Shahid’s switch comes almost exactly one year to the day that the opposition MDP submitted an unsuccessful no confidence motion against the speaker, accusing him of making decisions relating to significant parliamentary issues without discussing them with various political parties.

However, MDP MP and spokesperson Hamid Abdul Ghafoor today said that the speaker’s switch was strongly supported by the party’s “grass roots”.

Ghafoor claimed that Shahid’s arrival to the party reflected an “idealogical shift” in the country’s political arena that would bring many more supporters to the MDP who may have previously been sceptical about doing so.

“What [Shahid] is saying, I believe, is that the country needs stability,” he added.

Ghafoor claimed that he had not been made aware of any party moving to challenge Shahid’s position as speaker as a result of his decision to switch parties so far.

He said that the MDP would itself be holding a rally tomorrow night (April 19) dubbed ‘New Strength’. Shahid is believed to be among the speakers at the rally.

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JP rules out forming coalition with President Waheed ahead of elections

The Jumhoree Party (JP) has ruled out forming a coalition with fellow government-aligned parties ahead of presidential elections scheduled for September this year, despite its reported involvement in recent power sharing talks with President Dr Mohamed Waheed.

JP Spokesman Moosa Ramiz today told Minivan News that the party was not looking to form a coalition before the elections. He also slammed politicians that did not belong to the JP speaking on its behalf about possible coalition agreements.

Ramiz’s comments were made in response to reports in local media this week claiming Progressive Party of Maldives (PPM) member Umar Naseer was conducting talks to form a coalition of various parties, including the JP, behind President Waheed.

Naseer told Sun Online that a so-called “broad coalition” was being discussed to help secure a first round election victory against the opposition Maldivian Democratic Party (MDP) candidate Mohamed Nasheed.

Former PPM Deputy Leader Naseer, who last month mounted an unsuccessful bid to become the party’s presidential candidate, was present during discussions held at the official residence of President Waheed on Tuesday (April 16) night – fuelling uncertainty over his own future political allegiance.

Naseer was this week given an ultimatum by the government-aligned PPM to ‘reform and realign’ with the party’s charter or face expulsion after he accused MP Abdulla Yameen – his sole rival in the party’s recent presidential primary – of “rigging” the vote in his favour.

After refusing to defend himself during a PPM disciplinary committee hearing this week into his comments, Naseer has told local media that he would be revealing his future political plans tomorrow (April 19).

PPM MP and Spokesperson Ahmed Mahloof was not responding to calls from Minivan News at time of press today. Meanwhile, a spokesperson for Umar Naseer this week said that he would not give any interviews to Minivan News.

Naseer has told local media following the meeting at President Waheed’s residence that discussions had been held with numerous parties over forming a coalition. He added that the PPM was welcome to join any such alliance of parties. Also pictured at the meeting was JP Leader and presidential candidate MP Gasim Ibrahim.

However, JP Spokesperson Ramiz today slammed Naseer for speculating about another party’s plans, while also rejecting any suggestion it would seek to stand during the elections in a coalition.

“My brief answer would be that we are not going to do this [form a coalition ahead of elections],” he said.  “What right has Umar Naseer got to speak about the plans of a party he is not a member of?”

According to the JP website, Gasim Ibrahim said  today that he would not consider becoming the running mate of any other presidential candidate.

Amidst reported talks to form a so-called broad coalition behind the current president, the fellow government-aligned Dhivehi Rayyithunge Party (DRP) today said it refused to comment on potential presidential elections campaigns or comments made by other parties in the run up to the election.

Speaking to Minivan News, DRP Deputy Leader Dr Abdulla Mausoom claimed that unlike other political parties in the country, it was the only party that had not changed its actions or political positions over the last three to five years.

Without mentioning any specific names, Mausoom alleged that senior political figures in the country who had changed their positions and even political allegiances numerous times over the last half decade were a key contributor to a perceived loss of faith among the public in the country’s elected representatives.

Addressing rumours of the efforts to form a coalition behind the current president, opposition MDP MP Hamid Abdul Ghafoor meanwhile said he believed that there had been a shift in the country’s political allegiances in recent weeks ahead of September’s elections.

According to Ghafoor, this shift had lead to the formation of two separate factions in the coalition government of President Waheed, which MDP supporters maintain was brought to power in a “coup d’etat” after former President Nasheed resigned from office following a mutiny by sections of the police and military.

“We are seeing strong lines being drawn between those who backed the coup, and those opposing it,” he said. “There is a regrouping into two factions of the current dictatorship, then there is us.”

Ghafoor claimed that in the current political climate, the MDP was itself committed to trying to reach a transitional arrangement where the majority of members in parliament would believe it was in their interest to remove President Waheed from office – thereby facilitating early elections.

Despite the MDP’s aims, the government-aligned Dhivehi Qaumee Party (DQP) (DQP) this month formally entered into a coalition with the President’s own Gaumee Iththihaadh Party (GIP) ahead of the elections.

Both the DQP and GIP are small political parties currently facing potential dissolution for lacking the minimum requirement of 10,000 members as stipulated in the recently passed Political Parties Act.

DQP Leader and President Waheed’s Special Advisor Dr Hassan Saeed claimed this week that all political parties, except the opposition Maldivian Democratic Party (MDP), were welcome to join the coalition.

Dr Saeed was not responding to calls from Minivan News today.

The religious conservative Adhaalath Party has also publicly pledged its support to President Waheed, last month announcing plans to form a coalition with the GIP.

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PPM presidential primary results challenged in court

A member of the Progressive Party of Maldives (PPM), Rahma Moosa, has today lodged a case at the Civil Court challenging the results of the party’s presidential primary.

The Civil Court has confirmed that the case was filed today, adding it was uncertain when a first hearing would be scheduled.

According to local media, Moosa filed a case claiming that 8,915 people who were not officially registered as members of PPM had been allowed to vote in the primary.

She contended that the move contravened the Political Party Act and compromised the rights of all general members of the party.

The primary, held late last month, saw MP Abdulla Yameen selected at the PPM’s candidate to stand in the presidential election scheduled for September 7 this year.

Yameen defeated rival Umar Naseer with a 63 percent of the vote.

According to Moosa, while the Elections Commission (EC) website stated that the PPM had a total of 22,383 members as of March 10, the voter registry published by the party had 31,298 persons listed.

She claimed that members of parties other than PPM had also been included in the voter list, according to local media.

The PPM has previously said that although the additional persons had not been registered at the Elections Commission by March 10, they were allowed to vote as they had submitted membership forms to the party.

However, according to the Elections Commission website, in addition to the PPM’s 22,383 registered members, the party had submitted only an additional 1671 membership forms to the commission.  These forms are currently awaiting verification. This leaves the membership still 7244 shy of the number of voters registered in the party’s primaries.

Elections Commission Vice President Ahmed Fayaz said that the commission has temporarily halted processing political party membership forms.

“We are very hectically working on drafting and finalizing the regulations which must be made following the ratification of the Political Parties Act, as it does not even have any clauses to give us an interim period. Hence, we have temporarily stopped processing the verification of membership forms submitted by any political party, unless in special circumstances. By this, I mean a case like, say, in the instance where some persons need to be registered due to party primaries,” Fayaz said.

Moosa has meanwhile told local media that the case was submitted on the request of a large number of party members, who she said believed that the primary was not conducted in a free and fair manner.

In the first public appearance after Abdulla Yameen winning the primaries, PPM Leader and former President Maumoon Abdul Gayyoom referred to the recently concluded vote as “the most responsible, free and fair, transparent primaries ever held by a political party in the country to date.”

Umar Naseer however accused Yameen of “rigging” the election, alleging undue influence on voters, vote buying, intimidation of his supporters and denying a number of his supporters the right to vote by omitting their names from the voter list.

PPM has since given Umar Naseer a period of seven days in which he is expected to ‘reform and realign with the party’s charter or regulations’ or face expulsion from the party.

Rahma Moosa is reported in local media as being a PPM member who had supported Umar Naseer in the party’s primaries.

PPM Spokesperson Ahmed Mahloof’s phone was switched off, while the party’s presidential candidate Abdulla Yamin was not responding to calls at the time of press.

Umar Naseer’s secretary stated that, as a rule, he will not conduct interviews with Minivan News.

She said that no particular reasons were stated, and that those were the orders she had been given.

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Finance Minister confident MPs will back wider revenue measures

Finance Minister Abdulla Jihad has expressed confidence that MPs will approve a raft of measures to raise state revenue, even after they narrowly rejected government proposals to increase an airport service charge yesterday (April 16).

Hiking the airport service charge from US$18 to US$30 for international passengers was among a raft of measures proposed by the Finance Ministry within the estimated 2013 budget in order to raise MVR 1.8 billion (US$116 million) in new income.

The finance minister told MPs in December 2012 that additional revenue was needed to finance the fiscal deficit and rein in soaring public debt, which was projected to reach MVR 31 billion (US$2 billion) or 82 percent of GDP by the end of 2013.

After yesterday’s rejection of the service charge increase, Jihad told Minivan News that he was of the belief parliamentarians would back other proposed measures that he has previously claimed will be vital in balancing the state budget.

These measures include hiking Tourism Goods and Services Tax (T-GST) to 15 percent, introducing GST for telecom services, and “selectively” reversing import duty reductions.

Despite expressing optimism that these reforms would be passed, Jihad stressed that he had personally received no feedback from MPs or political representatives regarding the exact level of support for such measures at time of press.

During the parliamentary debate on increasing the airport service charge this week, MPs of the opposition Maldivian Democratic Party (MDP) and government-aligned Progressive Party of Maldives (PPM) both opposed the proposed hike.

MPs of both the majority and minority parties alleged that President Dr Mohamed Waheed planned to use an expected MVR185 million (US$12 million) from raising the departure tax to finance his presidential campaign before the increase was rejected.

“Significant” impact

Jihad today expressed concern that the Majlis’ rejection of hiking the airport service charge would significantly impact state revenues.

Speaking to newspaper Haveeru, Jihad said that budget forecasts has been designed with the increased airport charge in mind, with yesterday’s vote meaning a “significant amount” of funds would be lost from state revenue.

“If the amendments for the import duty are not passed, we will find it extremely difficult to manage the budgets of institutions. So it’s critical that the parliament expedites work on the bills and support them,” he was quoted as telling local newspaper Haveeru.

Jihad later told Minivan News that longer-term tax measures were already being considered as an alternative to cover any shortfall as a result of the airport charge not being increased.

He also did not rule out the possibility of resubmitting a proposal to increase the airport service charge at a later date – although no such decision had been made as yet.

The Parliamentary Group leaders of the country’s largest two parties could not be reached for comment today on the finance minister’s claims.

Maldivian Democratic Party (MDP) Parliament Group Leader Ibrahim Mohamed Solih (Ibu Solih) had his phone switched when contacted by Minivan News.  Solih’s PPM counterpart, presidential candidate Abdulla Yameen, was not responding to calls at time of press.

MDP MP and Spokesperson Hamid Abdul Ghafoor claimed the party would look to review all measures proposed in parliament to try and increase revenue on a “case-by-case” basis.

However, he claimed that the opposition party remained “skeptical” about any financial measures being proposed by the administration of President Waheed, accusing the government of pushing the country towards bankruptcy.

Fiscal responsibility

Despite rejecting an increased airport service charge, legislation on fiscal responsibility submitted in 2011 by the previous government was passed with 42 votes in favour and 10 against at a sitting of parliament on Monday (April 15).

If the bill is ratified, the government would be prohibited by law from obtaining loans after January 1, 2016 to finance recurrent expenditure or loan repayment.

The bill also sets limits on government spending and public debt based on proportion of GDP, mandating the government to not allow public debt to exceed 60 percent of GDP.

Borrowing from the central bank or Maldives Monetary Authority (MMA) should not exceed seven percent of the projected revenue for the year, while such loans would have to be paid back in a six-month period.

Moreover, a statement outlining the government’s mid-term fiscal policy must be submitted annually to parliament at the end of the financial year in July.

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President Waheed commences Haddhummathi Atoll visit

President Dr Mohamed Waheed has today commenced a visit to the islands of Dhanbidhoo and Kunahandhoo in Haddhummathi Atoll.

According to the President’s Office website, harbour projects for the two islands will officially be inaugurated by Dr Waheed during his visit.

Last Thursday (April 11), the president commenced a tour of North Maalhosmadulu Atoll in order to review the progress of island developments in the area.  The visits come ahead of presidential elections scheduled for September this year.

However, President Waheed’s electioneering has come under strong criticism from the government-aligned Progressive Party of Maldives (PPM) MPs in parliament this week.

MP Ali Arif accused the president of discontinuing public services and development projects, while using state funds to finance his election campaign, during a parliamentary session on Monday (April 15).

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DRP committee reveals contenders for deputy leader posts

Five people have expressed interest in standing for three vacant deputy leader posts within the government-aligned Dhivehi Rayyithunge Party (DRP), according to local media.

Ahead of the DRP congress scheduled to run from April 23 to April 25, the party’s Election Committee has said that MPs Ali Azim, Rozaina Adam and Mohamed Ramiz will be among those contesting for the posts, according to Sun Online.

Current Minister of Economic Development Ahmed Mohamed, as well as Deputy Minister of Fisheries and Agriculture Ali Solih are also expected to stand.

The committee also announced that 12 individuals had expressed interest in standing for six spots on the DRP’s council that are reserved for members of the public.

According to Sun Online, the DRP election committee has opted against holding votes to appoint a president and vice president for its women’s wing, along with a member of its Behavioural Committee as only one candidate had applied for each position.

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