Maldivian’s aren’t fools, projects cannot be delivered: Nasheed

  • Proposed a state budget of 2021 is MVR 34.7 billion
  • GDP is projected to contract by 19.5 percent in 2020
  • GDP is to rebound by 9.5 percent in 2021
  • Poverty rate is expected to increase to 5.6 percent in 2020
  • Postponing non-essential spending is critical to restore fiscal and debt sustainability
  • Public and publicly guaranteed (PPG) debt to increase to 120 percent
  • Diversify the economy through focusing on higher value-added financial and business services
Minister of Finance Ibrahim Ameer alongside Speaker of Parliament Mohamed Nasheed during MDP's "Rahvehi Fathis" campaign | Photo: MDP

Male’, Maldives – Speaker of Parliament, Former President Mohamed Nasheed has criticized the 2021 budget sent to the parliament by the government and told that the government should not take Maldivian’s to be fools.

He said this while speaking regarding the proposed income and budgeted projects for the next year and told that he did not believe that these projects could be delivered as the funding needed to be secured from foreign parties.

Before starting the budget debate, Speaker Nasheed asked all members of the budget committee to carefully read what the Governor of Maldives Monetary Authority (MMA), Ali Hashim and Auditor General Hassan Ziyath had advised the government during the parliamentary budget committee meetings.

According to Speaker Nasheed, he wanted to make it clear to all the parliament members that only a total of MVR 3.1 Billion was actually being allocated for PSIP projects and that the recurrent expenditure had been cut down by 21 percent. He also said that the loan repayment amount was extremely high and that this was the main burden on the budget.

He said that the grace period for the loans which were taken by the previous administration between 2013 and 2018 were ending this year and that it was clear to him that repayment of the loans was the main issue of the proposed budget.

After Bilehdhoo constituency MP, Ahmed Haleem (Dhonbileiy) criticized the Finance Minister and the government stating that the budget had been allocated based on the MP’s needs and wants and that some projects did not even have proper figures given in the budget, Speaker Nasheed had told that MP Haleem was very responsible in talking about the budget.

Speaker Nasheed also pointed out that only a few members had requested for time to speak during the budget debate and told that members should not be okay with what ever was sent by the government and that higher participation in the budget was needed. He told that the responsibility of members for this budget was very high and that this should be taken more seriously.

Speaker Nasheed’s criticism and questions over project financing came after the Finance Minister Ibrahim Ameer had assured the parliament that the projects would be carried out without any issues. Minister Ameer had also told that financing for most of these big projects had already been secured.

Giving examples of these, Minister Ameer said that the port relocation and bridge projects finance was already secured through the Indian line of credit of USD 400 Million and the USD 100 Million grant by India.

Next years budget has been getting criticism from various parties including the MMA and Auditor General.

Auditor General’s Office has said that it is highly alarming that Maldives is leaning too much on one specific country for income from grants for developmental projects in the upcoming year.

Speaking at the Parliament Committee reviewing the 2021 budget, Auditor General’s Office told that the 3/4 of the income from grants was forecasted to be received from India and that this is highly risky due to the Covid-19 pandemic. While the government expects to receive MVR 2,226,539,752 as grants for the year 2021, MVR 1,730,271,572 out of the figure is forecasted to be received from the neighboring India.

Governor of Maldives Monetary Authority (MMA), Ali Hashim had also told that the many ambitious projects included in the 2021 budget may not be completed due to the current state of the Maldivian economy. Speaking at the budget committee meeting, the former of Finance Minister Hashim said that if the COVID situation does not improve, infrastructure projects secluded for 2021 may come to halt due to cash flow management issues.

The International Monetary Fund (IMF) and the World bank have also advised Maldives to not suddenly halt ongoing infrastructure projects, as this would cause a large economic shock, but to rather stop these gradually.

Parliaments minority leader, Progressive Party of Maldives (PPM)’s parliamentary group leader, MP Ahmed Saleem (Redwave Saleem) had also called to review the budget proposed by the government for the next year and to resubmit it again.

MP Saleem had told that the peoples financial position was at a very bad place due to the economic impacts of the Covid-19 pandemic and that having such huge developmental projects right now was not advisable. He also told that the 2021 budget should be focused more on the economic recovery of the state amidst the Covid-19 pandemics impacts.

According to the government the proposed MVR 34.8 Billion budget for 2021 is planned and set to be in accordance with the implementation of the “National Resilience and Recover 2020-2022” plan which was made to boost the economy from the fateful consequences of Covid-19. 

It is estimated that the government would receive MVR 17.8 billion as revenue and grants in 2021, of which tax revenue constitutes the major item while the estimated budget balance for 2021 is a deficit of MVR 15.5 billion. According to the government the primary balance for this period is a deficit of MVR 12.9 billion and this deficit would be financed through various financial instruments such as bonds, sukuk and treasury bills and by borrowing.