Parliamentary budget debate concludes

Parliament’s budget debate concluded at yesterday’s sitting after 79 out of 85 MPs shared their thoughts on the record MVR24.3 billion (US$1.5 billion) state budget for 2015.

While opposition MPs criticised higher taxes, deficit spending and alleged discrimination in the allocation of funds, pro-government MPs praised planned capital investments and contended that the budget was balanced.

Speaking at yesterday’s sitting, Majority Leader Ahmed Nihan insisted that funds and development projects in the budget were fairly allocated and denied discriminating against constituencies represented by opposition MPs.

“We won’t see the colour pink in any part of this page,” the parliamentary group leader of the ruling Progressive Party of Maldives (PPM) said, referring to the party’s colour.

The MVR6.3 billion (US$408 million) allocated for the Public Sector Investment Programme (PSIP) – 24 percent of the budget – would see an unprecedented number of infrastructure projects launched in 2015, he said.

All MPs were invited to request infrastructure projects for their constituencies before the budget was submitted, Nihan noted.

The budget was formulated to fulfil campaign pledges of the PPM, he continued, and President Abdulla Yameen’s administration would deliver during the next four years.

He noted that President Yameen has launched a MVR200 million (US$12.9 million) loan scheme for young entrepreneurs and small and medium-sized businesses.

Other PPM MPs claimed that the budget would bring “revolutionary” changes to the economy and spur growth, noting that recurrent expenditure of MVR15.8 billion (US$1 billion) would be covered by government income or revenue of MVR21.5 billion (US$1.3 billion).

Minority opinion

At Monday’s sitting, however, Minority Leader Ibrahim Mohamed Solih questioned whether the MVR21.5 billion revenue forecast in the budget could be realised in full.

The parliamentary group leader of the opposition Maldivian Democratic Party (MDP) predicted that revenue in 2015 would not exceed MVR16.4 billion (US$1 billion), which would be 16 or 18 percent higher than total revenue collected this year.

However, state expenditure was projected to rise by 40 percent, Solih said, adding that the revenue would not be sufficient to cover recurrent expenditure of MVR15.8 billion and MVR1.3 billion (US$84.3 million) for loan repayment – leading to a deficit of about MVR600 million (US$38.9 million).

While MVR340 million (US$22 million) was forecast in the budget as revenue from introducing a US$10 ‘green tax’ in the last quarter of 2015, Solih noted that the government has decided to lower the amount to US$6 per day and delay implementation to November, which would lead to a revenue shortfall of about MVR300 million (US$19.4 million).

Public debt

Solih further contended that PPM MPs had falsely claimed that the MDP government inherited a national debt of MVR4 billion (US$259 million) from the previous administration in 2008.

“That was domestic debt. The state’s total debt was MVR10 billion [US$648 million] at the time,” he said.

Moreover, the MDP government spent MVR2 billion (US$129.7 million) in 2009 and MVR1.5 billion (US$97 million) in 2010 to settle unpaid bills from the previous government, Solih said.

When the MDP government was ousted in February 2012, Solih said debt had reached MVR21 billion – about MVR3.6 billion a year for three years – which grew to about MVR25 billion (US$1.3 billion) during President Dr Mohamed Waheed’s two years in office.

However, state debt would reach about MVR32 billion (US$2 billion) – 67 percent of GDP – at the end of 2014, Solih noted, which means MVR7 billion (US$453.9 million) has been accumulated in debt during the current administration’s first year in office.

“So instead of pointing fingers at each other let’s all work together to solve this,” he said.

Solih also accused the government of spending millions in excess of the budget approved by parliament for 2014, which was done in violation of public finance laws.

Nihan, however, disputed the figures yesterday and claimed that a national debt of MVR24,000 per capita at the end of former President Maumoon Abdul Gayoom’s 30-year reign had risen to MVR100,000 at the end of former President Mohamed Nasheed’s three years in power.

The state’s expenditure rose dramatically in the aftermath of the December 2004 tsunami, Nihan said, which included repairing damage caused to infrastructure and assist displaced persons.

Instead of apportioning blame for driving up the state’s debt, Nihan said the responsibility of MPs and the government was saving the nation from debt.

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