Male’, Maldives – Progressive Party of Maldives (PPM) Vice President and Member of Parliament for Th.Guraidhoo Constituency Mohamed Ghassan Maumoon said that the financial policies set by the government can only result in the value of the the Maldivian currency Rufiyaa going down.
During yesterday’s Parliamentary meeting debating the MVR 34.7 Billion budget for 2021, Ghassan raised multiple questions and expressed his concerns on the countercyclical fiscal policy planned by the government to carry out next year.
Ghassan explained that normally, under countercyclical fiscal policies, during times of low economic activity, government spending increases and taxation decreases, however the 2021 budget includes import duty increases to some items, which increase cost of said items and increase the burden on citizens already greatly affected by COVID-19.
Ghassan added that the fiscal policy the Maldivan government plans to enact has only had success in countries with currency accepted by financial institutions in the U.S, U.K and E.U, and that the government policies should rather be catered to the small economy of the Maldives.
“Maldives is a small country, 100 percent dependent on imports and with a relatively small economy, if we go ahead with policies like this, I don’t believe we can achieve anything other than the price of Rufiyaa falling” Ghassan stated.
The son of Former President Maumoon Abdul Gayyoom also criticized incomes and expenditure amounts planned in the budget, saying that a huge portion of the projected income is based on the assumption that 600,000 will arrive in 2021, which Ghassan doubts could be achieved.
He added that the projected revenue includes MVR 2.2 Billion as financial aid, of which 75% is from India, who have recently announced a technical recession.
He further stated that the budget aims to gain a large amount from selling sukuk’s and bonds, which he deems would be difficult considering the currently bad international credit rating of the Maldives.
He concluded calling for the government to lower expenses and the budget deficit, and to establish universal income for residents and to invest in infrastructure that would bring in revenue for the government. He called for all Parliamentarians to review the budget and to send it back for large changes, otherwise, he claimed that the Maldivian economy would be adversely affected.