Record MVR28bn budget proposed for 2018

Record MVR28bn budget proposed for 2018
November 15 13:09 2017

Finance Minister Ahmed Munawar submitted for parliamentary approval Wednesday a record MVR27.9 billion (US$1.8 billion) budget for 2018.

Opposition lawmakers continued to protest with chants of “government of thieves” while Munawar presented the budget projections.

“The goal of the 2018 budget is developing human resources for building the nation along with spending on infrastructure development without halt to complete the numerous ongoing projects,” he said.

The government will spend MVR24.9 billion and collect MVR22.4 billion as revenue, Munawar said. The deficit of MVR2.5 billion would be 3.2 percent of GDP.

Some MVR3 billion for debt repayment and proceeds to a sovereign development fund is not counted among total expenditure, he noted.

Nearly 60 percent of the budget is recurrent expenditure such as salaries, pensions, subsidies, and administrative costs. Some MVR11.9 billion is allocated for capital investments.

Munawar noted provisions for higher food and electricity subsidies as well as MVR234 million to hike salaries for civil servants.

High priority projects include home ownership programmes – for which MVR580 million would be spent – as well as developing domestic airports, land reclamation, road construction, and establishing water and sewerage systems.

Munawar also promised “a revolutionary change” to the education system with implementation of the new curriculum and a project to make all schools digital.

“The heavy book bag that students have to carry will change to a light tablet,” he said.

Adjourning the sitting, the speaker announced that the budget review committee will hold its first meeting later today. The budget is likely to be put to a vote before parliament breaks for recess at the end of November.

The 2018 budget is the last of President Abdulla Yameen’s five-year term.

Munawar noted that total revenue in 2017 is expected to reach MVR20.8 billion whilst spending would amount to MVR22.2 billion. With the inclusion of debt repayment and the sovereign development fund, the 2017 budget would be MVR27 billion.

The new estimate for the fiscal deficit is MVR1.4 billion or two percent of GDP, well above the projected MVR303.7 million.

The revised estimate for economic growth in 2017 is 6.9 percent, driven by tourism and construction.

A record MVR4.3 billion was spent for debt repayment this year, Munawar said. At the end of the year, public debt would stand at MVR43 billion or 60 percent of GDP.

National debt increased due to financing of “mega projects,” he said. The debt rose by MVR15 billion during the past four years whilst MVR18 billion was spent on development projects, he added.

In late October, parliament passed an MVR493 million (US$32 million) supplementary budget to approve unforeseen spending and new revenue-raising measures for the last two months of 2017.

Presenting the supplementary budget, Munawar had conceded that “a large portion” of income from new revenue-raising measures such as raising MVR1 billion from investments in Special Economic Zones and selling land in Malé would not materialise.

He also noted that revenue from an airport development charge was less than anticipated due to the Majlis decision to reduce the fee for Maldivians and delay its introduction.