Former MP Easa released from police custody

Former Maldivian Democratic Party (MDP) MP Ahmed Easa has been released from detention today amid allegations of mistreatment under police custody.

A police media official told Minivan News today that Easa’s family had requested permission to take the former MP overseas for a spinal cord operation. He was brought to ADK hospital for a doctor’s consultation and hospitalized last night.

The police authorised the medical leave after the family submitted a written recommendation from Easa’s doctor, the official said.

Easa was released from custody as police have determined that his prolonged detention “was no longer necessary for the investigation,” he added.

Easa was arrested from the mass anti-government protest on May 1 along with nearly 200 protesters. MDP chairperson Ali Waheed, Adhaalath Party president Sheikh Imran Abdulla, and Jumhooree Party deputy leader Ameen Ibrahim were arrested later in the night.

The three leaders of the allied opposition parties remain under police custody while most other detainees have been released.

The MDP has accused police of beating Easa and other detainees after their arrest from the May Day protest.

The human rights watchdog is investigating cases of alleged police brutality and custodial abuse.

Easa was allegedly kicked and beaten on the head with batons after he was hauled on to the police vehicle. Minivan News journalists at the scene heard Easa scream from the vehicle packed with SO officers.

Easa was limping when he was brought to the remand hearing on Saturday.

Police have denied the allegations and suggested that lawyers and families file complaints at oversight bodies such as the Police Integrity Commission and the Human Rights Commission of Maldives.

Ali Waheed was meanwhile brought to the ADK hospital in Malé for treatment last night.

Ali Waheed was reportedly taken to hospital around 6:00pm for an MRI scan of his spinal cord, which was recommended by doctors who diagnosed his back pain. He was taken back to Dhoonidhoo detention centre around 7:45pm.

His family had previously said Waheed had been brought to Malé a week after the doctor requested the scans. The family has also expressed concern with police failing to provide medication for Waheed’s diabetes.


Q&A: MP Ahmed Easa – Kendhikulhudhoo constituency

In a series of interviews to lead into the the 2014 parliamentary elections – scheduled for March 22nd – Minivan News will be conducting interviews with incumbent MPs.

All 77 sitting members have been contacted, from across the political spectrum, to be asked a standardised set of questions with additional topicals. The interviews will be published as and when they are received.

As part of the series, Minivan News interviewed MP Ahmed Easa.

MP Easa represents the Kendhikulhudhoo constituency of Noonu Atoll and is from opposition Maldivian Democratic Party.

Mariyath Mohamed: What made you enter the political arena and how?

Ahmed Easa: My maternal family has always been a political family. My maternal uncle Tholhendhoo Hassan Gasim even spent time in detention as a political prisoner during Maumoon’s [former President Maumoon Abdul Gayoom] regime and was tortured then. Hassan Gasim was my guardian after my mother passed away. So from a young age I was exposed to political discussions. Hassan Gasim also served as island chief for about 40 years, and even as Atoll Chief for Noonu Atoll. He even received an Award of Honour from the state for his practice of traditional medicine. He was quite popular in the North, and this led to many high level political discussions happening in my house at the time.

From a young age I was exposed to the truth of the torture and injustice that was a norm in Gayoom’s regime, and so from a young age I disliked Maumoon’s leadership.

I grew up and joined the tourist resort industry. I had the good fortune to get many opportunities to work abroad within the luxury hotel industry, which resulted in my getting to meet numerous famous personalities, including politicians, leaders of various nations. I also became aware of the levels to which citizens of other countries had their human rights protected and civilian rights respected. While I have not been able to acquire academic credentials in the field of politics, various experiences led to my knowledge of the area being quite strengthened.

And then after I came back to work in the Maldives, the Employee Act was formed, and tourist sector employees were completely removed from having these rights. With our background knowledge of labour rights in other parts of the world, we could not at all tolerate this injustice. So, along with other long term colleagues, we set out to obtain the rights we were entitled to. Our belief was that if we were not able to find a solution to this matter ahead of the 2008 presidential elections, it would later prove doubly hard to accomplish our goals. This is because, as you know, it is easiest to get the attention of politicians at times when there is an election looming closely ahead.

So we exerted a lot of pressure to amend the law. We met with all the parliamentarians, the cabinet and other government authorities. We submitted the largest local petition to date, with signatures of over 10,000 tourism sector employees. And even then we were not able to get a good enough response, and so we called for the country’s first industrial strike. We called for employees to halt work in all resorts of the Maldives, and received immense support. When work in resorts began to come to a halt, Gayoom asked then Minister of Legal Reform Mohamed ‘Kutti’ Nasheed to submit amendments to the parliament. I believe that was a huge accomplishment gathered with my leadership and the hard work of many others. I take pride in the fact that the association we formed is now stronger, and operating as an internationally recognized trade union under affiliation with international trade unions. While I am not on its leadership anymore, there are some very young capable persons leading it today.

The first purely political activity I engaged in was during the referendum on whether there should be a presidential or parliamentary system here. I actively led the campaign in Kendhikulhudhoo to elect a parliamentary system. I took leave from my work at the resort and even freelanced as a reporter for the publication known as Minivan News at the time. The regulation’s Article 21 said that the votes cast in any island must be counted at the island itself before the ballot box is shipped back to the capital. In many islands, things happened in contradiction to this act, with ballot boxes being sealed and sent out without being counted. I protested. I said that things have to be done as per the regulations. After some chaos and huge problems around the matter, the Elections Commission finally ordered the regulations to be followed in all islands.

Even at that point, I am a man who sticks to my principles. I enter anything after much consideration and thought. I only take up what I believe to be something that I must do. Once I do come out, I will work on the front lines. My belief is that once we set out to do something, there are only two possible results. One is to succeed, and the other is to fail. There are things we must accept both in our successes and failures.

For example, the recent presidential elections. I don’t accept how the matters around the election proceeded. I don’t believe it was a free and fair election. It can only be a free and fair election if the Elections Commission is able to practically have all the powers and authority granted to it by law in the conduct of an election. What I saw was that the past election was held by the Supreme Court, and not the Elections Commission. There are no laws that allow the Supreme Court to conduct an election, and so I don’t accept the way the elections were conducted.

However, although we did not win the polls, there are certain things that we did succeed in. One is that we were able to bring the Maldives out of the state of coup, and install an elected leader voted in by the people, regardless of how the elections were conducted. So we have accepted this. Our party believes it is a huge success that there is a government which came to power as a result of citizens being able to exercise their right to vote.

Even today I believe, the country is better suited to be run under a parliamentary system. I don’t think that the overlap between the three powers of state and the issues that arise as a result will still be present if we can better understand the governing system. I believe the political leaders must think about this today. One must not try to change the system once there is an election overhead, that will only lead to chaos. It must be well thought out and done in more peaceful times.

MM: Referring back to the association you have mentioned, what is your role in the formation of TEAM (Tourism Employees Association of Maldives) and do you still assist in its management at present?

AE: Like I said, we started working as a group to ascertain that we are entitled to our rights. It was not an easy job to get employees in over 90 resorts to sign the petition without us personally travelling to those islands. However, even the petition did not bring about the desired result. So we believed, after the advice of experienced persons, that it is through forming a trade union that we can advocate for our rights effectively. However, as it was not clear if we authorised to form such a union under then existing laws, we registered as an organisation. However, today it has changed into a trade union.

Today, my role is only advisory. And that too, I only provide advice if I am requested for it, and the association is not mandated to follow my advice. The trade union has a strong leadership today. As there may arise a matter of conflict of interest, they advised me to resign and stop attending board meetings from the point I got elected as an MP of then ruling party MDP.

MM: Based on your attendance and work in this ending term, how would you judge your performance as an MP?

AE: As I see it, the parliament is a hectic place, and one that carries serious responsibilities. I attempted to perform at my maximum capacity. I don’t think my attendance records will be too bad. Unless I am away on an official trip, or more recently out of Malé for a medical trip, I have rarely failed to attend any sessions. There have been instances where I have flown back on my own expenses from official trips in Europe just to participate in important votes in parliament. So as I see it, I paid a lot of attention to attending well. I have never missed any important votes taken in parliament.

I believe strongly in multi-party democracy and have always worked to uphold party values. I believe the work I conducted was rather good.

My attendance to committees is also very good. As the MDP member who simultaneously served on the most number of committees, there are some I might have missed due to overlapping meetings.

MM: What are the main committees you worked on? What particular bills did you focus on?

AE: I submitted numerous amendments to the Employees Act. I also submitted a bill regarding state expenditure, targeted to holding the state accountable. That bill has been passed and ratified now. That bill brings down the threat of the state going into debt regardless of which government comes to power in future. There are procedures under which state funds can be spent and loans can be taken included in this act and I believe it is a crucial piece of legislature in times as politically volatile as now.

Also other legislature like the Pre-school Act passed while I was the Chair of the National Development Committee. I did a lot of work as chair of that committee. If you do some research into it you will see that until I became chair of that committee, it had never before succeeded in completing draft of any bill and submitting it to the parliament floor.

I was in the National Development Committee, the Government Oversight Committee, the Disciplinary Committee and a temporary committee.

After the February 7 transfer of power, I focused strongly on the Government Oversight Committee as I believed it was one of the most important committees in session at the time. It is something deeply connected to citizens.

MM: What would you say are the biggest achievements within your term; in terms of what you have accomplished for your constituency and the country as a whole?

AE: In Noonu Atoll, one very sad truth is that we never see our elected MP except when elections near. Especially when Abdulla Yameen Abdul Gayoom served as the MP for the constituency, people only see him during election time. I, for one, never saw Yameen except during election time. Before I myself got elected to parliament, the last time I had seen Yameen was just before the previous parliamentary election. We see him every five years.

One thing that citizens often said to me when I first contested is that they won’t see me either from the point I get elected. That I won’t be where I can hear their concerns again. I pledged then that I would change that norm.

Today, I can proudly say that of the six islands in my constituency, there isn’t a single one I haven’t visited at least twenty to twenty five times. I have walked down all main streets, talked to the people, and dropped by several houses during these visits.

The other thing is how much I have assisted people in various things. Besides my parliamentary work, the only thing I have spent time on is assisting people in my constituency in various things.

However it is the citizens who will decide if I have served them well enough, that is not for me to say. They will make that decision in the upcoming election. If I do not get re-elected, it means I haven’t visited those islands frequently enough. That the citizens want to see their parliamentarian more. If, however, I do get re-elected, I have room to believe that the people are satisfied with the work I have done. That I must strive to do even better in my next five years.

MM: What would you say is the biggest mistake or worst step you have taken in your political career? Why?

AE: Letting a vote in favour of Tourism Minister Ahmed Adheeb slip through my hands in the recent parliament vote to endorse Yameen’s cabinet. That is the biggest mistake of my political career, what I politically suffered for most.

MM: As what you have referred to was a cause for much public criticism, would you like to explain how you came about to commit what you have termed your biggest mistake?

AE: As I see it, it is something I cannot really give much explanation for. It is 100 percent my fault. The parliament is always a loud and chaotic place, especially during important votes such as this one. Once the members start shouting, it is hard to hear what the speaker is saying or anyone else is saying, even if they speak over the microphone. That is not any justification for having let that vote slip by. If I had been able to concentrate as much as I should have, then that vote would not have slipped through my hands.

This is a kind of mistake that should not have been made by someone of my political calibre. But it happened because it was so loud there and I misheard the name that was announced.

I myself wouldn’t believe it if someone else told me what I am today. Someone of my status should not have committed such a silly mistake, and yet is done. I am facing many political challenges due to it. I am also being criticised by the grassroot level of my party because of this. I respectfully accept it all, I do understand how they feel. I believe that I deserve a penalisation for my mistake. As an organisation, the party must penalise me for this mistake. MDP is the most democratic and strongest political party. To remain so, it must take action against those in responsible positions whose acts negatively affect the party, regardless of whether the act was unintentional or deliberate.

I believe I must be penalised. It is the party that will decide what the penalty will be.

I began my political career with MDP and will not work with any other political ideology. I believe the MDP leadership includes those most faithful to the country right now. I believe President Mohamed Nasheed is the most sincere political leader. I remain steadfast in my decision to stand behind him.

I have heard through social media that MDP is considering retracting parliamentary tickets from those that voted to endorse those cabinet ministers. If they do so, I will wholeheartedly accept their decision. By saying ‘accept’, I mean that if MDP does cancel my primary ticket, if I try there might be opportunities where I can contest through another party or even as an independent candidate. However, if the party does take that action against me, I assure you that I will neither defect to another party nor will I contest as an independent candidate. Additionally, I will back whichever candidate gets the ticket and will do what I can to assist him in his campaign.

What I mean to say is that I began my political career with MDP, and that I will end it with MDP.

MM: You have just said that a vote to endorse the Tourism Minister slipped through your hands. Does this mean that this is the only cabinet minister you voted in favour of that day?

AE: Yes. I have never voted against party lines in the past five years. Even in more important votes, votes which our political opposition tried far harder to succeed in, I have steadfastly voted in alignment with party lines.

I have never broken a party whip line, deliberately or mistakenly, except for this time. And even in this instance, it was only the Adheeb vote – I voted along party lines for everyone else.

MM: Are you taking the optional committee allowance of an additional MVR20,000? Why or why not?

AE: I never really supported it even when it was first spoken of. If I remember right, I did not even participate in the first vote that was taken regarding committee allowance. I don’t remember too well how I voted in the later vote on the matter.

As I remember, I voted in line with the majority of votes that day in parliament. This is something I often do. If the party gives us a free whip, I vote as the majority of the full parliament feels is best. I think this is one of the best policies of democracy, aligning with majority. Perhaps, by doing so, I might have acted in a way that led some citizens to be displeased. What I am saying is it is possible that 77 of us do something that may displease the 200,000 or 300,000 citizens of this country.

I cannot say for certain whether I voted for or against it, but I definitely would have voted in the way the majority did that day.

The committee allowance issue led to a lot of discord. I have often spoken in parliament of compiling a solid financial structure under which those in state positions get paid. I have always advocated that the same principles be applied when giving incentives and privileges to those serving in the three separate branches of the state.

For example, about MVR100,000 is being spent on a Supreme Court judge every month, which is a huge amount. With all our allowances, an MP is also paid about MVR 82,500 or 62,500 a month, which, yes, is a hefty amount. So what I am saying is, talking only about the incentives that an MP gets and ignoring judges and others in state positions will not bring the system into order. All of it needs to be addressed.

We cannot adapt a system where we have to spend more than what the state earns.

MM: What is your view about parliamentarians and other public servants declaring their financial assets publicly for the electorate to be able to refer to?

AE: When the Disciplinary Committee discussed about financial statements, MDP members advocated for it to be made public. But the DRP, PPM, and JP stopped it through a vote then. As I see it, citizens must be able to see the financial assets of politicians. It must be available publicly even on the parliament website.

That day, opposition members said to me that while I may not have any concerns about making financial statements public as I don’t engage in other businesses, they have family businesses which they don’t want out in the public eye. I accept that they might have family businesses, but I am not referring to those. I am saying that the person who must be accountable to the public must reveal his personal financial statement.

MM: Are you re-contesting in the next elections? Why? What do you hope to accomplish should you be elected for a new term?

AE: Yes, so far I have got the parliamentary ticket without a primary as no one else contested for the Kendhikulhudhoo constituency from MDP. If, like I said before, MDP does not retract my candidacy due to my mistake in the cabinet vote I will contest. But I will remain in serving the people through MDP.

Why am I re-contesting for Kendhikulhudhoo constituency? I have always said I will contest in two terms. I have always believed that it is for very good reason that many countries say that a president can serve for ten consecutive years maximum. While the constitution does not have any limitations on how many times a person can apply for reconstestation, I believe that after two terms we must allow younger new candidates to come out and face up to the challenge. This is what I intend to do.

MM: What improvements do you feel the 18th Majlis will need to make to improve as an institution?

AE: There are some administrative challenges that the parliament faces in running effectively. This year’s budget includes funds to complete the new parliament building, which I think is absolutely necessary.

There are also some bills that need to be completed for the Constitution to be fully in effect, and so far we have not been able to finish this work.

However, as someone who worked in parliament in five years, I must say that although the performance of many members on the parliament floor may not seem satisfactory to the general public, they do a lot of work in the committees, which is where the majority of our work is conducted anyway. It is a huge challenge to effectively do this work that we do not have sufficient space to conduct meetings in.

MM: What are your thoughts on party switching? Do you think it undermines the party system?

AE: As I see it, we cannot force anyone to remain in a party. The question that then arises is if we should narrow this habit of defection through a law. However, there is a Supreme Court verdict which clearly states that this cannot be done.

What is left to be considered is honesty and sincerity. A party is an ideology. I believe that it is people who do not have a strong political belief or ideology that switches parties. The only cure for this is for parties to focus on ensuring that it is people with strong political beliefs that they raise to positions.

I for one am saying clearly that I believe in the MDP ideology very strongly. I have no doubts about my political beliefs and will not change it. As long as MDP remains steadfast in upholding its current political principles, I will remain with it.


MP Easa withdraws bill reducing penalty for refusal to provide urine

Opposition Maldivian Democratic Party (MDP) MP Ahmed Easa has withdrawn a bill reducing the penalty for refusal to provide urine from a one year jail term to 15 days in jail.

Easa proposed the amendment to the Drugs Act after the Criminal Court sought to prosecute MDP MPs Abdulla Jabir and Hamid Abdul Ghafoor for refusal to provide urine when they were arrested on Hondaidhoo Island in August 2012.

If convicted with a one-year jail term, the two MPs may lose their parliamentary seats.

At the time, the MDP accused the judiciary of “purging” MDP MPs from parliament in order to influence the party’s simple majority in parliament ahead of several no-confidence motions against ministers of former President Dr Mohamed Waheed Hassan.

Easa said he had withdrawn the bill due to criticism from his own party and because he believes the police will be more professional with the election of President Abdulla Yameen Abdul Gayoom.

The Criminal Court’s Chief Judge Abdulla Mohamed has sentenced Hamid to six months in jail for disobedience to order after he refused to obey court summons to attend a refusal to provide urine trial.

Hamid contends the court summons were issued in violation of the Parliamentary Powers and Privileges Act which prohibits the judiciary from scheduling hearings during Majlis work hours.

Hamid had sought refuse inside the People’s Majlis when the six month jail term was issued. The MDP then amended the parliament’s standing orders to allow an MP convicted of criminal acts to continue to attend Majlis sittings.

The Home Ministry transferred Hamid to house arrest in mid November and Hamid has now left the parliament after four weeks.

New Home Minister Umar Naseer has said enforcing Hamid’s jail sentence would be difficult as the Department of Penitentiary and Rehabilitation Department (DPRS) does not have the facilities to transport Hamid back and forth from Maafushi Island jail to Malé.

“We have to arrange a speed boat to bring him to every single session if he is kept in a jail outside Malé. We may have to bring him two or three times a day,” he told local newspaper Haveeru.

Furthermore, Naseer explained that incarcerating Hamid in the Malé City jail was not an option because the jail was at full capacity.


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:


Fiscal responsibility bill presented to parliament

A fiscal responsibility bill to impose limits on government spending and ensure public debt sustainability was proposed to parliament yesterday.

Presenting the draft legislation on behalf of the government, MP Ahmed Easa of the ruling Maldivian Democratic Party (MDP) said that a lot of effort was needed to “change the inherited, outdated and indebted economic system.”

“Since 2005, [expenditure] in the annual state budget was out of proportion to income and the budgets had a very high level of debt,” he explained.

As a consequence of issuing treasury bills (T-bills) to finance the budget deficit, Easa continued, banks reduced lending to local businesses in favour of buying government securities, which exacerbated unemployment and slowed growth.

Easa 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,” he said.

As measures to mandate fiscal responsibility, said Easa, the legislation would set 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, Easa said, while the loan 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.


Opposition Dhivehi Rayyithunge Party (DRP) MP Dr Abdulla Mausoom however argued that the purpose of the legislation was to negate controversial amendments brought to the Public Finance Act last year.

Mausoom explained that the passage of the fiscal responsibility bill would abolish article five of the Finance Act amendments bill, which stipulated that the government must seek parliamentary approval before obtaining loans.

According to the amendments voted through by the opposition majority, “any relief, benefit or subsidy provided by the state” would also be subject to parliamentary approval.

The amendments were cited as the main reason for the cabinet resignation on June 29 last year – President Mohamed Nasheed announced at the time that he would veto the bill as the new laws would make it “impossible for the government to function.”

While President Nasheed has since ratified the bill after parliament overrode the veto, the government filed a case at the Supreme Court in December 2010 contesting the constitutionality of some provisions.

The DRP MP for Kelaa meanwhile argued that the fiscal responsibility bill was drafted to “take away all the powers given to local councils [under the Decentralisation Act] and give it back to the Finance Minister and President.”

Mausoom also criticised a provision that would empower the Finance Minister to change cash flow plans proposed to the state budget by independent commissions.

Debt sustainability

Finance Minister Ahmed Inaz informed parliament yesterday that the public debt of the Maldives – excluding government securities – stands at US$637.6 million – including US$446 million outstanding debt inherited from the previous administration.

A UNDP paper on achieving debt sustainability in the Maldives published in December 2010 observed that “as a percentage of GDP, public debt levels have almost doubled from 55 percent in 2004 to an estimated 97 percent in 2010.”

“Public debt service as a percent of government revenues will more than double between 2006 and 2010 from under 15 percent to over 30 percent,” it continued. “The IMF recently classified the country as ‘at high risk’ of debt distress.”

As short-term contributing factors for the country’s “rapid accumulation of public and private debt,” the paper identified the devastating tsunami of December 2004; the cost of the democratisation process that began in the same year; the concurrent global food-fuel-financial crises between 2007 and 2010; and the Maldives’ graduation from a Least Developed Country (LDC) in January 2011.

The UNDP paper noted that the reconstruction effort was largely financed by international donors: “Following the tsunami, ODA [Official Development Assistance] increased sharply from US$72 million in 2004 to US$824 million in 2005. ODA levels remained above US$500 million annually for the next four years,” the paper explains.

However as a consequence of high demand for local expertise by multilateral agencies, “increases in public sector salaries were implemented in order to retain qualified personnel with the government.

“Between 2004 and 2009, the average monthly salary of a government sector worker increased from MRF 3,223 (US$250) to MRF 11, 136 (US$866),” the paper notes.

It adds that the government of 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 notes.

Consequently, by 2010 recurrent expenditure – wage bill and administrative costs – was projected to exceed 82 percent of total expenditures “while capital expenditures will amount to just 18 percent in the same year.”

Moreover when the impact of the worst global recession in decades struck the Maldives in September 2008, “the Maldivian economy was already in the middle of a severe economic crisis with substantial fiscal and current account deficits, high liquidity growth, double digit inflation, pressure on the fixed exchange rate, increases in public and private sector debt, rising inequalities between the capital and the atolls, and a costly civil service.”

Meanwhile as the ballooning fiscal deficit reached 26 percent of GDP in 2009, tourist arrivals declined ten percent in the first year of the new administration.

However the new government’s efforts to reduce government spending with pay cuts of up to 20 percent and plans to downsize the civil service – which employs a third of the country’s workforce – was met with “a severe political backlash from parliament.”

“In March 2010, the parliament passed a 2010 budget with amendments which increased the government’s proposed budget by 7 percent (or 4.5 percent of GDP),” the paper observed.

“Three quarters of this increase funded a reversal in civil service wage cuts implemented the previous year. Progress on redundancies has also been slower than expected and reforms in this area are unlikely to be completed until the end of 2011 at the earliest. This will have important fiscal consequences.”