MMA – Page 6 – Minivan News

Taming fiscal deficit “most pressing macroeconomic priority for Maldives”: IMF mission

The International Monetary Fund (IMF) has urged the government to implement a raft of measures to raise revenue and reduce spending to rein in a ballooning fiscal deficit.

In a statement on Monday following a visit by an IMF mission for the 2012 Article IV Consultation – the organisation’s “regular exchange of views with member countries” – the IMF team noted that strengthening government finances was “the most pressing macroeconomic priority for Maldives”.

“The fiscal deficit is expected to rise in 2012 to 16 percent of GDP [Gross Domestic Product] in cash terms, and likely even higher if one accounts for the government’s unpaid bills, accumulated in an increasingly challenging environment for financing,” the IMF mission stated.

In April 2012, the head of a previous IMF mission to the Maldives told Minivan News that the country’s fiscal deficit was “substantially understated” at less than 10 percent of GDP as projected in the 2012 budget, predicting a figure closer to 17.5 percent of GDP or higher.

“The large deficit has implied a rise in the public debt ratio, which now stands at over 80 percent of GDP, and has also helped to boost national imports, thus worsening dollar shortages in the economy and putting pressure on MMA [Maldives Monetary Authority] reserves,” the more recent IMF mission said in its statement.

The forecast for the current account deficit was “nearly 30 percent of GDP this year.”

“Gross international reserves at the MMA have been declining slowly, [and] now account for just one and a half months of imports, and could be more substantially pressured if major borrowings maturing in the next few months are not rolled over,” the IMF mission warned.

Recommendations to formulate “a realistic and prudent budget for 2013” meanwhile included hiking T-GST (Tourism Goods and Services Tax) and “selectively” reversing import duty reductions.

“On the expenditure side, electricity subsidies can be better targeted to the needy, costs of the health programme Aasandha can be further rationalised and reduced, wages should be controlled, including through the establishment of a Pay Commission, and a plan could be laid out for medium-term civil service reform.”

The mission suggested that tighter monetary policy could “help support the exchange rate and the needed external adjustment.”

“Higher Treasury bill yields, in conjunction with some technical changes to the monetary operations framework, may also help to ease the government’s financing difficulties,” the mission noted.

“Finally, resorts’ foreign-exchange licenses could be restricted to small-value amounts to help channel dollars through the formal banking system.”

Economic growth in 2012 was meanwhile expected to slow to three and half percent on the back of “depressed tourist arrivals earlier in the year and weak global conditions,” which have been “only partially offset by strong performance in construction and fisheries-related manufacturing.”

Inflation was “elevated on account of increases to GST and international food prices but is expected to slow to under 6 percent next year and decline further thereafter.”

Following consultations with President Dr Mohamed Waheed Hassan Manik, Finance Minister Abdulla Jihad, members of parliament and MMA Governor Dr Fazeel Najeeb, the mission noted that “the authorities have expressed an interest in a Staff Monitored Programme,” for which further discussions would be held.

In its meeting with parliament’s Finance and Economic Committees last week, the IMF mission urged the Majlis to expedite legislation on fiscal responsibility.

The mission said it would prepare a report for consideration by the IMF Executive Board in January 2013.

“Rationalising”

Following the visit of the IMF team from October 30 to November 12, head of the mission Koshy Mathai met the press at the MMA auditorium on Monday.

Mathai revealed that the mission had recommended increasing T-GST to 15 percent, noting that “the Maldives takes a smaller tax from tourism industry than other small nations such as Fiji, Mauritius, and Seychelles, who are heavily dependent on tourism.”

However, unlike the other countries, Mathai said, “rich tourists visit the Maldives. For them, an increase in prices will not be a deterrent.”

Hiking T-GST and raising import duties on oil and liquor were among drastic austerity measures proposed by the Finance Ministry to parliament’s Finance Committee in August.

Several resort managers told Minivan News at the time that the proposed measures will affect the financial viability of the tourism industry.

However, most of the measures have not been implemented. Appealing for cooperation from government offices to reduce their budgets, Finance Minister Jihad told Minivan News in September that “everyone should tighten their belts.”

Jihad told local media yesterday that the ministry accepted the recommendations and would work with parliament to implement the measures in next year’s budget.

Mathai meanwhile observed that government subsidies on foodstuff imported by the State Trading Organisation (STO) benefited rich and poor alike.

“The resorts are buying these staple foods at highly subsidised prices,” he noted.

Moreover, the government’s universal health programme Aasandha needed changes to reduce costs, Mathai suggested, such as “moving to generic drugs and controlling payments that are made to foreign hospitals.”

“Harmonising” the pay scale

Mathai also stressed the importance of instituting a Pay Commission to streamline the pay structure for government employees.

“We have a lot of independent institutions in this country and they are all on different pay scales,” he observed.

“There’s no harmonisation within the public service. There are radically different pay scales. And that has problems in terms of incentivising staff to belong to one institution versus the other. And it also implies a lot of cost for the government. So establishing a Pay Commission that can set up a rational system of compensation for the entire public service seems like a priority.”

On reforming the civil service “in the medium term,” Mathai referred to a programme conducted by the previous government to incentivise voluntary redundancy, which “didn’t work so well.”

As part of an alternative “bottom-up approach,” Mathai revealed that the new government has completed “a detailed jobs analysis in many ministries.”

The analysis was intended to identify “where more staff need to be hired and [whether] some staff can be let go” as well as to determine “the best way of rationalising the size and composition of the civil service to make it deliver services most efficiently for the Maldives.”

In the medium term, said Mathai, a policy of population consolidation could ensure that service provision and administrative costs were “not duplicated.”

“To us that seems like a very logical thing, a very logical way of reducing costs, but of course it has to be done in a voluntary way,” Mathai said.

Economic diversification was also necessary to ensure that the economy has “more than one or two bases to go forward and reduce vulnerabilities to risks,” he added.

According to a report by the World Bank in May 2010 – which identified the dramatic growth of the public sector wage bill as the origin of the Maldives’ ongoing fiscal imbalances – increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, which was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

“Between 2004 and 2009, the average monthly salary of a government sector worker increased from MVR 3,223 (US$250) to MVR 11, 136 (US$866),” explained a UNDP paper on achieving debt sustainability in the Maldives published in December 2010.

Former President Maumoon Abdul Gayoom responded to growing calls for democratisation with “a substantial fiscal stimulus programme” of increased government spending, “much of which was not related to post-tsunami reconstruction efforts.”

“This strategy led to a large increase in the number of civil servants from around 26,000 in 2004 to around 34,000 by 2008 or 11 percent of the total population. Thus the government simultaneously increased the number of public sector workers as well as their salaries,” the paper noted.

Consequently, recurrent expenditure – wage bill and administrative costs – exceeded 82 percent of total government spending in 2010.

However, the new government’s efforts to enforce pay cuts of up to 20 percent and downsize the civil service – which employs a third of the country’s workforce – were met with “a severe political backlash from parliament,” the UNDP paper observed.

Introducing an economic reform package in late 2011, former President Mohamed Nasheed’s administration insisted that increased revenue from new taxes would match expenditure, and boasted that the 2012 budget was the first in many years to balance income and expenditure.

Monetary policy

Meanwhile, on the recommendation to raise rates on T-bills to finance government spending, Mathai suggested that if the government was “willing to pay higher yields, maybe the banks would be willing to subscribe.”

Mathai cautioned against loosening monetary policy “when dollars are at short supply and the local currency is under some pressure, as it has been for years.”

“Loosening the policy means pushing the economy to grow faster, creating more import demand, creating more demand for dollars – you don’t want to flood the system with rufiyaa so that people can bid many rufiyaa for each dollar in the parallel market,” he explained.

“Rather, you want to absorb the rufiyaa so they can’t bid so many rufiyaa and parallel market rates come down.”

The IMF mission also believed that financial supervision of the banking system “could definitely be strengthened,” Mathai said, suggesting that “some leeway recently given in terms of provisioning requirements for banks could be rolled back and banks should be required to comply with the original rules, which were tougher.”

On regulatory measures that could be taken to alleviate the dollar shortage, Mathai suggested “making sure that resorts that are dealing with foreign exchange don’t have unrestricted licenses to deal with any amount of money.”

Resorts should be “restricted to small value transactions that are appropriate for the visitors that are staying there,” he said.

Mathai also explained that the requested “Staff Monitoring Programme” would not involve disbursement of funds from the IMF.

“We would basically see how the government is doing against its own targets – it would set targets for itself for performance of these different economic areas – and then if the track record is built up and things are going well, then maybe later we could discuss having a programme where money is disbursed,” Mathai said.

Asked about the previous administration’s decision to float the rufiyaa – which the IMF praised as “a bold step” – Mathai said the IMF’s “fundamental suggestion had always been, and remains, to tighten the fiscal deficit.”

The dollar shortage could not be tackled without reducing government spending, he explained, because “devaluation alone will never succeed.”

“What happened last year is basically that the fiscal position didn’t really improve – it improved in cash terms, but you know a lot of bills were not paid,” he said. “So really there wasn’t any tightening of fiscal policy. I think that’s the fundamental reason why devaluation was not as successful as it could have been.”

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IMF urges parliament to expedite fiscal responsibility legislation

A delegation from the International Monetary Fund (IMF) has urged MPs to expedite legislation on fiscal responsibility, at a meeting with parliament’s Finance Committee and Economic Affairs Committee on Wednesday.

According to the parliament secretariat, the IMF team told MPs that passage of the fiscal responsibility bill currently being reviewed by the Economic Affairs Committee was the most important measure the People’s Majlis could take to improve the country’s economic outlook.

A fiscal responsibility bill to impose limits on government spending and ensure public debt sustainability was submitted to parliament in 2011 by the administration of former President Mohamed Nasheed as part of an economic reform package.

Presenting the bill in August 2011, MP Ahmed Easa of the formerly ruling Maldivian Democratic Party (MDP) said a lot of effort was needed to “change the inherited, outdated and indebted economic system.”

As measures to legally mandate fiscal responsibility, the legislation proposed setting limits on government spending and public debt based on proportion of GDP (Gross Domestic Product).

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

Moreover, the bill proposed that 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.

Meanwhile, according to parliament, members of the IMF mission currently in the Maldives are Overall Coordinator Dr Koshy Mathai, Dr Fazurin Jamaludin, Nicholas Million, Dr Nandaka Molagoda, and Jules Tapsoba.

Ahmed Munawwar, Manager of the Monetary Policy Section of the MMA also attended yesterday’s meeting.

According to the latest figures from the Finance Ministry the fiscal deficit as of November 4 stands at MVR 2.4 billion (US$155.6 million), with government spending of MVR 10.4 billion (US$674.4 million) outstripping revenues of MVR 8 billion (US$518.8 million) so far this year.

Of the MVR 10 billion in expenditure, MVR 7.6 billion (US$492.8 million) was on recurrent expenditure – salaries and allowances for government employees and administrative costs – while MVR 1.5 billion (US$103.7 million) was spent on repaying loans and interest payments.

Fiscal imbalance

In April 2012, Jonathan Dunn, chief of the IMF mission to the Maldives, told Minivan News that the country’s fiscal deficit was “substantially understated.”

The remarks followed the IMF warning of dire consequences if expenditure was not curbed to rein in the ballooning budget deficit.

Speaking in parliament on behalf of the former government in August 2011, MP Easa meanwhile noted that according to the World Bank, a 66 percent increase in salaries and allowances for government employees between 2006 and 2008 was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

“We are seeing the bitter consequences today of spending out of the budget without any control or limit,” MP Easa had said.

Dunn had meanwhile emphasised in April 2012 that “fiscal imbalances in the Maldives have been present for many years” and that “fiscal adjustment remains necessary”.

Faced with increasing pressure from the IMF to lower expenditure after failed attempts in 2010 to keep in place unpopular pay cuts for civil servants – a maneuver blocked by the Civil Services Commission (CSC) and backed the then opposition – former President Nasheed’s administration insisted that increased revenue from the new taxes would match expenditure, and boasted that the 2012 budget was the first in many years to balance income and expenditure.

Following the police mutiny and controversial transfer of presidential power, spending by President Dr Mohamed Waheed’s administration had escalated as it sought to shore up support in a fractious political environment.

Moreover, in September 2012, a pair of government-aligned MPs blamed President Waheed’s lack of solid policies for the increase in state expenditure.

Newly-announced expenditure in first few months of the Waheed administration included:

The promotion of 1000 police officers – approximately a third of the force – and plans to both recruit 200 new officers in 2012 and appoint four new Assistant Commissioners;
Lump sum payment of two years of allowances to military personnel;
An unspecified amount for an international public relations firm, to combat negative publicity and “rally an alliance of support” in the international media following the controversial change of power and coverage of police crackdowns;
MVR 100 million (US$6.5 million) in fishing subsidies;
Creation of two new ministries, including the Ministry of Gender, Family and Human Rights, and the Ministry of Environment and Energy;
The reimbursement of MVR 443.7 million (US$28.8 million) in civil servant salaries from July 1, following cuts by Nasheed’s administration in 2010. In addition, civil servant working hours have been reduced to 8am-3pm;
The doubling of the budget for the Maldives Marketing and Public Relations Corporation (MMPRC) to US$S4.5 million.
The hiring of 110 new police officers.

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Suspension of parliament leaves legal void for regulations on freedom of assembly, political parties

Several general regulations without parent legislation, including rules governing political parties and freedom of assembly, will cease to have legal force if an extension is not approved at a parliament sitting before midnight on Sunday, August 5.

Parliament however remains deadlocked and sittings have been suspended indefinitely amidst forced cancellations and escalating political tension.

Prior to the ratification of the new constitution on August 7, 2008, parliament passed a General Regulations Act as parent legislation for over 80 regulations without a statutory basis, or were not formulated under an Act of parliament. These include regulations for criminal justice procedures, companies and finance leasing transactions, insurance, jails and parole, freedom of information and building codes.

Article 271 of the constitution states, “Regulations derive their authority from laws passed by the People’s Majlis pursuant to which they are enacted, and are enforceable pursuant to such lawful authority. Any regulations requiring compliance by citizens must only be enacted pursuant to authority granted by a law enacted by the People’s Majlis.”

The parent act prolonged the lifespan of the regulations – deemed necessary for administrative functions and service provision – for a one year period until new legislation, such as a Criminal Procedures Act, Evidence Act, Freedom of Information Act and Political Parties Act could be enacted.

The act provided for further extensions based on recommendations by parliament’s Rules Committee. The last extension was approved in December 2011 and is set to elapse on August 5, after which the regulations would become null and void.

With the People’s Majlis at a standstill and the outcome of talks between parliamentary group leaders unclear, Deputy Speaker Ahmed Nazim yesterday warned of an impending “legal void” should the parent act be allowed to expire.

Nazim told newspaper Haveeru that the Act included “two very important regulations” for the Maldives Monetary Authority (MMA).

“This problem will become a huge issue,” the People’s Alliance (PA) leader was quoted as saying. “It is therefore of utmost importance that a Majlis sitting is held before Sunday to find a solution. If not, the country will face a big constitutional problem.”

Parliament’s Rules Committee meanwhile met last week and decided to remove six regulations from the General Regulations Act.

According to the Majlis secretariat, the committee also decided to extend the deadline for the remaining regulations to April 2013, following “consideration of legal opinion by the Attorney General’s Office.”

However, article 5(b) of the Act states that extensions must be approved by the Majlis and previous extensions were put for a vote on the floor.

Independent MP for Kulhudhufushi South, Mohamed ‘Kutti’ Nasheed, told the local daily today that failure to approve a further extension could disrupt services and raise questions of the legality of government functions.

As the regulations concerned a number of areas and would “directly affect” people from “various fields and arenas”, Nasheed said a sitting of parliament had to be held before Sunday “even for five minutes” to vote to approve an extension.

The formerly ruling Maldivian Democratic Party (MDP) has meanwhile called for President Dr Mohamed Waheed Hassan Manik and leaders of political parties represented in parliament to come to the negotiating table to resolve the ongoing political dispute.

A statement released by the MDP parliamentary group yesterday contended that in the wake of the “coup d’etat” on February 7, the Maldivian state, constitution, democracy and economy had “come to a halt.”

The party would cooperate with resuming parliament sittings after a compromise agreement is reached through dialogue, the statement said.

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MDP early election goal better sought through Majlis, not “acts of terrorism”: government

The 50,000-member strong Maldivian Democratic Party (MDP) has said anti-government protests will “intensify” as the country awaits further action from the Commonwealth, while the government has challenged the motives behind ongoing demonstrations.

President’s Office Media Secretary Masood Imad claimed the now opposition MDP, led by former President Mohamed Nasheed, is not interested in democratic processes to ensure early elections, preferring instead to opt for protests the government has labelled “terrorism”.

The Maldives was set a four week deadline by the Commonwealth Ministerial Action Group (CMAG) on April 16 to address the impartiality of President Dr Mohamed Waheed’s independent inquiry commission into the controversial transfer of power, or face “stronger measures”.

President Waheed has already pledged to hold “early” elections by July 2013 – the earliest date permitted, under the constitution, Imad told Minivan News.

Any demands for elections earlier than that date – as requested by international bodies such the Commonwealth and EU– should be achieved through parliament. The MDP presently holds 31 elected members in the 77 seat Majlis chamber, following the recent defection of MDP MP Shifag Mufeed to former President Maumoon Abdul Gayoom’s Progressive Party of the Maldives (PPM).

“I don’t see a reason why [former President Mohamed Nasheed] is demonstrating other than to promote his lunatic point of view. He is encouraging hooliganism and acts of terrorism like burning down buildings,” alleged Imad. “We have given them a date for early elections and that is July 2013. That is the earliest we can do.”

The comments were made after a few thousand MDP supporters conducted demonstrations over the weekend near the Maldives Monetary Authority (MMA) building in Male’. The gathering saw MDP members and supporters holding meetings and criticising the alleged role of mutinous elements in the Maldives’ security forces in bringing President Waheed’s government to power.

Meanwhile, several hundred MDP protesters waving yellow flags mobbed President Waheed’s car during a visit to the island of Kulhudhuffushi over the weekend.

The MDP has alleged that February’s transfer of power, in which Waheed took office after Mohamed Nasheed “resigned” following a mutiny by sections of the police and military, was a “coup d’etat”. The party has since refused to accept the present executive’s legitimacy. This led to the MDP twice boycotting the President’s inaugural speech to parliament, as well as a vote last week to approve Waheed’s cabinet and vice president appointees.

“Gentleman’s option”

Imad questioned why Nasheed and his supporters were not choosing to take “the gentleman’s option” by pursuing early elections and a constitutional amendment in parliament: “The job could be done right now if [Nasheed] thinks realistically,” he claimed.

“Nasheed himself loves to take the streets and make a nuisance of himself. He believes he defeated Gayoom on his own but he didn’t. Nasheed was hiding in his house while others were out protesting,” Imad said.

He said that rather than protesting, he believed the MDP would have greater success in seeking a vote through the People’s Majlis, where it remains the majority representative.

The MDP presently stands against a government-aligned coalition of rival parties including the PPM and the then-opposition majority party from which in split in 2011, the Dhivehi Rayyithunge Party (DRP).

Imad also alleged that Nasheed was a “dictatorial” presence in the MDP and did not care for democratic processes, after the passing last week of two no-confidence motions against the party’s president and vice-president by the MDP’s national council.

Nearly 95 percent of those in attendance voted in support of the no-confidence motions against former MDP President Dr Ibrahim Didi and former Vice-President Alhan Fahmy.

Dr Didi has since submitted an official complaint to the Elections Commission (EC) regarding his ouster by the party, alleging that the decision was not in-line with the party’s registered constitution.

Imad said the party’s of the no-confidence motions reflected badly on Nasheed’s own democratic credentials.

“[Nasheed] is now throwing away elected people in his own party. Clearly an election is not important to him,” Imad said. “ Dr Didi and Mr Alhan are elected members of the party.”

Weekend gatherings

Addressing the MDP gathering outside the MMA building over the weekend, party spokesperson Hamid Adbul Ghafoor told Minivan News that protests were likely to increase in number in the coming weeks.

With two weeks until CMAG’s deadline for the government to review the composition and mandate of the Commission of National Inquiry (CNI) expires, Ghafoor said that protests were expected to “intensify”.

He added that despite the presence of riot police during Friday’s demonstration, demonstrators were able to peacefully hold meetings.

“We have set a precedent where we can speak to security forces peacefully about our grievances. I believe the administration now understand that we are not trying to attempt a coup against them,” he said. “This is even though we believe that a section of the police force in this country took money and turned mercenary to overthrow Nasheed’s government [on February 7],” he alleged.

Police Sub-Inspector Hassan Haneef told Minivan News that a “few incidents” occurred during the demonstration leading to the arrest of six people.

According to local media reports, riot police blocked roads surrounding the MMA gathering. Water cannons and other crowd deterrents were deployed on site, were unused during the demonstration.

Momentum

Minivan News observed around 4000 people taking part in the demonstration outside the MMA building at the peak of the protest.

Two weeks previously, the party claimed that 10,000 people gathered in Male’ to protest. Another protest last week reportedly consisted of around 6000 people.

MDP Women’s Wing spokesperson Aishath Aniya told Minivan News at the time that interest still remained “strong” among party supporters for protests.

The momentum of the protests had not diminished and the numbers of people taking to the streets were consistent, she claimed.

“I don’t see the numbers of protesters decreasing, though [turnout] does depend on the time and place of demonstrations,” she said. “We would obviously get fewer protesters during school hours.”

Aniya claimed that from her experience, during instances where former President Mohamed Nasheed was in attendance, Large numbers of people were attracted to demonstrations when former President Mohamed Nasheed was in attendance, she observed.

There was, she said, “tremendous pressure” among MDP members to mobilise and demonstrate at events attended by the new president around the country.

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MMA accepts MDP MP Musthafa’s BCCI debt after the court rejected the money

The Civil Court has refused to accept payment of the debt it had ordered paid by Maldivian Democratic Party (MDP) MP Mohamed Musthafa, after the ruling against him was last week upheld by the Supreme Court.

The case had been filed against him by Progressive Party of the Maldives (PPM) Deptuy Leader Umar Naseer, and the ruling meant that Musthafa was disqualified as an MP for the former ruling party, forcing a by-election in his seat of Thimarafushi.

Musthafa this morning sent a person to pay the debt to the court – a loan of US$31,231.66 (Rf 481,952) borrowed from the now defunct Bank of Credit and Commerce International (BCCI).

The Civil Court has confirmed that a person had sought to pay the debt on Musthafa’s behalf, after the Supreme Court ruling did not mention that the money was to be paid to the former ‘Madhanee’, or Civil, Court.

Until President Nasheed signed the Judicature Act into law last year, the official name of the Civil Court had been Madhanee Court – ‘madhanee’ being the Arabic word for ‘civil’.

MDP MP Musthafa today told Minivan News that he had been trying to pay the money every day since losing the caase last Friday, but said the court had not accepted it.

‘’Today I thought I would inform that media and send someone to the court to pay the money, and the court did not accept it again,’’ Musthafa said. ‘’I wrote a letter to the court but they did not respond to it.’’

Later today, Musthafa said the Civil Court registrar had called him and met with him, and said the Supreme Court’s ruling did not specify who the recipient of the money was to be, and that the Civil Court did not know what they should do with it, Musthafa said.

‘’The Supreme Court told me to get assistance from the Maldives Monetary Authority (MMA) and the Attorney General,’’ he said. ‘’So then I sent the money to the MMA, and the MMA has received the money.’’

He also said that tomorrow he will file a case in the Civil Court asking the court to order the MMA to pay him the US$500,000 that the BCCI was obliged to pay Musthafa, in a separate case concerning the supply of meat and other goods.

‘’They have today proved that the MMA are the live parent of BCCI [despite BCCI being defunct],’’ he said. ‘’This is funny to me – because when they have to pay me something owed by BCCI, they deny they are the live parent, but when I have something to pay to BCCI they become the live parent of BCCI.’’

In November last year Musthafa threatened legal action against the Maldives Monetary Authority (MMA) if it did not pay the US$500,000 that BCCI owed his company Seafood International, alleging that the sum was due to be paid to his company according to a 1991 London court ruling.

Citing MMA as the “live branch of BCCI in the Maldives,” Musthafa previously stated that “the debt of a dead person has to be paid by a living legal parent.”

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MDP MP Musthafa to sue MMA for alleged US$500,000 in legal debt

Maldivian Democratic Party (MDP) MP Mohamed Musthafa has sent a letter to the Maldives Monetary Authority (MMA) threatening legal action if it does will not pay US$500,000 that the Bank of Credit and Commerce International (BCCI) owed Musthafa’s Seafood Company.

Mustafa said the money was to be paid according to a ruling issued by the London Commercial Court in 1991.

‘’This money was the money we paid to Generalmeat Limited in Manchester to import flour, sugar and tin during the days we imported items from Generalmeat Limited,’’ Musthafa said in the letter. ‘’We waited for the goods for months. They said they had loaded 74 containers in the name of our company and later when we checked to Hanjin Shipping Line and Bangladesh Shipping Corporation we found out that Generalmeat had not loaded any containers in the name of our company.’’

Musthafa said when he realized that Generalmeat Limited had deceived his company, the company then appointed Birkett Westhorp and Loan law firm and filed a suit in the London Commercial Court.

‘’The London Commercial Court issued a court order to freeze all the accounts of Generalmeat Limited, but BCCI pretended that they did not receive the court warrant and transferred Generalmeat’s money in BCCI to shareholders’ wives accounts in Scotland,’’ he alleged in the letter.

‘’The London Commercial Court then ruled that BCCI and Generalmeat have deceived Seafood and ordered they pay Seafood US$500,000 in 14 days, and that the money should be paid to Seafood in the duration by withdrawing money from any account of BCCI anywhere in the world.’’

Musthafa said his Seafood Company then filed the case in the Singapore High Court citing Commonwealth Law Enforcement Declaration, and requested the court seize a BCCI boat loaded with flour at Singapore port.

‘’The Singapore High Court then detained the boat, but while this case was going on in the court, nine other international companies that BCCI had deceived came to know about this case and entered into it,’’ Musthafa said. ‘’But then we realized that it would take years to reach to a conclusion while the flour would expire in three months, so we got out of the suit.’’

Since the ruling came originally from London’s Commercial Court and the Maldives is a member state of the Commonwealth, the Maldives must implement the verdict, claimed Musthafa.

‘’BCCI is dead now and MMA is the live branch of BCCI in the Maldives,” he said. “The debt of a dead person has to be paid by a living legal parent. If the MMA does not pay us within seven days we will sue the MMA in court and when we sue, we will ask the court to take the amount of money for the loss we have had for the past 20 years as a cause of not having this money.’’

Speaking to Minivan News today, Musthafa said that if the MMA did not respond to the letter by the end of this week, he will have no other choice but to file the case in the court.

‘’It was a ruling that all the countries followed and implemented, so the MMA should implement the verdict too,’’ he said.

Governor of the MMA Fazeel Najeeb was not responding at time of press.

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New Rf500 notes enter circulation

New Rf500 notes will be introduced into national circulation today, Maldives Inland Revenue Authority (MIRA) has announced.

The new note bears the signature of Governor Fazeel Najib of Maldives Monetary Authority (MMA). The signature and a date change are the only changes to the Rf500 note, Haveeru reports.

The new notes are dated December 29, 2008; Muharram 1, 1430.

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MP allowance debacle “not a mix-up”: State Finance Minister

The Finance Ministry today rejected implications that yesterday’s release and recall of the controversial Rf20,000-a-month committee allowances against a court injunction was a mistake which had caused confusion in the government.

“I don’t think it’s a mix-up,” said State Minister of Finance Ahmed Assad today. Assad was unclear about the court injunction.

“Releasing that sort of money is not a big procedure, I think this is just people trying to follow the general rules and experiencing an administrative error,” he said.

Assad didn’t believe anyone deserved blame, and said that “if anything, it is the ministry at large that was at fault.”

Local daily Haveeru yesterday reported that the allowances had been issued “by mistake.”

Finance Minister Ahmed Inaz had not responded to Minivan inquiries at time of press.

The court injunction, which was issued on September 26, ordered the Finance Ministry not to release funds for the committee allowance until the court rules on a case filed on behalf of a civil servant, contending that the allowance could not be given before deducted amounts from civil servants salaries were paid back.

The injunction has since been appealed by the Attorney General’s Office at the High Court, which is due to hold a first hearing on Sunday.

Parliamentary privileges

Meanwhile parliament yesterday debated a motion without notice proposed by Vilufushi MP Riyaz Rasheed claiming that a civic action campaign launched by concerned citizens in late August violated MPs’ special privileges.

MDP MP Ahmed Easa told Minivan News yesterday that colleagues had said the allowance was being released to the parliament secretariat, but he was told that it had been held back by the Minister of Finance.

“I don’t think there was any wording, anything in what the court said indicating that they couldn’t release the money,” said Easa. “But no money has been going in to my account today, I can tell you that.”

Easa elaborated on the allowance, saying that the amount of staffing support and allowances other government branches received justified MPs accepting the proposed allowance.

“The MP point of view is that some of the independent wages and allowances are greater than MPs. The MPs are expected to do research and other duties, but we don’t have an office, a supporting staff, a phone allowance, a travel stipend to visit constituents or other things to support our work. Seven percent of our salary is taken out for a pension fund, and Male’ is an expensive place to live,” said Easa.

Easa said he will accept the allowance, but pointed out that he had always objected to it in parliament on the grounds that all payrolls should be streamlined.

“But if these other government groups are taking an allowance, why not the MPs? This is a democracy, so I always respect the majority decision.”

Lawyer Mohamed Shafaz Wajeeh, one of two lawyers involved in the civil case, argued that the number of people benefiting from the allowance does not justify the sum released, which amounts to Rf18 million (US$1.1 million).

“It’s greed. Just greed,” Shafaz said. “MPs and higher-ups in the government are probably more aware of their own power than they should be. The thinking behind this goes against everything we know.”

Shafaz suggested the government consider other options, such as releasing the allowance in installments to lighten the burden on the state budget and other subsidiaries.

“But I’m not sure how much political will there is to do this. Everyone says the allowance is a good idea.”

Civil society

Although members of the civil sector earlier issued a statement objecting to the allowance, which they called “a gross injustice to the Maldivian people,” they have not articulated an official position on the issue of late.

Maldives Democracy Network (MDN) Director Fathimath Ibrahim Didi said that individuals in the organization were involved at the beginning, but that they did not represent MDN.

“Now, I think there may be a group working against the allowance, but it is loosely formed involving people from NGOs, lawyers and individuals,” she said.

Transparency Director Ilham Mohamed told Minivan News that a volunteer team was addressing the matter, but that large protests had not been organized among local non-government organizations (NGOs).

“I believe there may be sporadic gatherings in different places,” said Mohamed. “I do know that the NGOs that were involved in the original statement opposing the MP allowance are unified on this issue.”

“Symbolic”

The decision to approve the Rf20,000 (US$1200) monthly allowances in December 2010 was met with protests and widespread public indignation. However in June this year, parliament rejected a resolution proposed by opposition Dhivehi Rayyithunge Party (DRP) MP Ahmed Mahlouf to scrap the allowance.

Meanwhile the current civic action campaign was prompted by parliament’s Public Accounts Committee (PAC) deciding in late August to to issue a lump sum of Rf140,000 (US$9,000) as committee allowance back pay for January through July this year.

Article 102 of the constitution states that parliament shall determine the salaries and allowances of the President, Vice President, cabinet ministers, members of parliament, members of the Judiciary, and members of the independent institutions.

The Rf20,000 allowance was initially approved on December 28, 2010 as part of a revised pay scheme recommended by the PAC.

During yesterday’s debate on a privileges motion regarding the anti-committee allowance campaign, MP ‘Colonel’ Mohamed Nasheed, a member of the PAC, explained that the committee felt that MPs should earn a higher salary than High Court judges.

“But even then the honourable members of the Public Accounts Committee believed that MPs were receiving a sufficiently large salary in relation to the country’s economic situation,” he said, adding that a decision was made to institute a “symbolic” committee allowance.

“The thinking at the time was to give it to MPs who attend committee meetings as a very symbolic thing, for example one laari or 15 laari. But to ensure that take-home pay for MPs would be Rf82,500,” he said.

However, he continued, this “noble effort” became politicised and the subject of “an anti-campaign programme.”

Colonel called for legal action against the activists “when they go beyond the boundaries of free expression” and the right to protest, claiming that MPs’ families and children had been targeted.

Echoing a claim made by a number of MPs yesterday, Colonel said none of his constituents had asked him to decline the allowance.

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Finance Minister condemns Public Accounts Committee Chair

Finance Minister Ahmed Inaz has said that the Rf456,000 (US$31,000) issued to Maldives Media Association (MMA) according to the Finance Report sent by the ministry to parliament was actually issued to Maldives Media Council (MMC) and not to the dissolved NGO MMA.

”It was technically a typing error, we sent the Public Accounts Committee a report consisting information about some of the recent transactions, and the Public Accounts Committee’s Chair MP Ahmed Nazim [who is also the Deputy Speaker of the Parliament] asked us to send detailed information of all the transactions mentioned in the report,” Inaz explained.

He said the ministry then sent the committee details of the transactions in the report, which still had the typing error uncorrected.

”We did not identify that error, and after we sent the details, the chair of the committee told the media that we have used Rf456,000 from the contingency budget to pay salaries of MMA staff,” he said. ”Actually it was used to pay the salaries of MMC staff.”

Inaz said he regretted that Nazim had not verified the typing error with the ministry before going to the media.

”We send the report to the parliament to cooperate with them and to assist them in making us accountable, I attended the committee three days in a row this week and we do not have a policy of withholding information,” he said, adding that he condemned Nazim’s actions and hoped that he would not repeat such things in the future.

”I also apologize to MMA members, but the responsibility goes to the Chair of the Public Accounts Committee as well,” Inaz said. ”Things like this make the ministry lose the confidence we have in the Chair of the committee.”

Nazim told local media this week that a report submitted by the Finance Ministry showed that over Rf450,000 from the state budget was issued to the MMA.

In the wake of the revelation, the Maldives Journalists Association (MJA) and senior members of the now-defunct Maldives Media Association (MMA) called on the Auditor General and Anti-Corruption Commission (ACC) to investigate the alleged Rf456,000 released from the state’s contingency budget.

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