Government promises to reduce food prices amid protests

Government promises to reduce food prices amid protests
October 03 20:07 2016

The government has promised to reduce the cost of food staples after a backlash from within the ruling party and protests by the opposition over an abrupt hike in food and electricity prices.

Prices for food staples doubled overnight in Malé on Saturday after the government cut subsidies for rice, flour and sugar. Prices are even higher in the Maldives’ far-flung atolls such as the southern Addu City where a kilo of all three staples costs MVR2 (US$0.13) more than in the capital.

Ahmed Shaheer, the managing director of the State Trading Organisation, which imports the majority of food staples, told reporters that the state-owned wholesaler is looking at how it can cut costs to bring down prices.

“We are discussing with the authorities to explore ways to reduce the prices at which STO imports staples. We are looking into whether we can reduce the cost of logistics, or cost of overheads or expanding storage. God Willing, we will try to reduce the cost of future shipments,” he said.

The promise came after dozens of people took to the streets on the island of Hithadhoo in Addu City, the country’s southernmost atoll on Sunday, calling on the government to reverse the “ruinous” subsidy cut.

In Malé, a small group of Maldivian Democratic Party supporters carrying placards gathered near the Nalahiya hotel Sunday night but were quickly dispersed by riot police. MP Mohamed Falah and an activist were briefly detained.

Protests without prior permission are now restricted to the artificial beach.

At the opposition’s nightly rally at its meeting hall in Malé that same night, MDP Vice President Mohamed Shifaz announced that the Maldives United Opposition – a broad coalition formed by the MDP with its ally Adhaalath Party and former government officials – is preparing to stage a mass protest next Friday.

MDP MP Rozaina Adam meanwhile told the press this afternoon the party has asked the parliament’s government oversight committee to convene for an inquiry into the subsidy cut.

Rozaina noted that then-Finance Minister Abdulla Jihad had assured that food and electricity subsidies would remain unchanged when he submitted the 2016 budget for parliamentary approval.

Leaked screenshots of a conversation on instant messaging platform Viber between MPs of the Progressive Party of Maldives and President Abdulla Yameen have shown that ruling party MPs were not consulted either, she added.

After several PPM MPs objected to the subsidy cut on the Viber group, Yameen said the government “had no choice” and urged lawmakers to “clarify their doubts with the government.”

He added: “I too want the public’s support and vote. I am saddened.”

MP Ibrahim Didi, who initially described the move as a “gift to the opposition” and warned of a backlash in the upcoming council elections, has since changed his tune.

“I support this if it was a decision made directly by the president. And I will be at the forefront to do everything necessary to defend the president,” he said, according to leaked screenshots, which also showed several expressing support for his stance.

But PPM MPs Ahmed ‘Redwave’ Saleem and Ibrahim Waheed have criticised the move in local media.

Saleem told newspaper Mihaaru that PPM MPs, who control a majority of seats in the 85-member house, should bear responsibility for the government’s unpopular policies.

“That’s because MPs allow the government to do whatever it wants. So MPs should ask forgiveness from the public for all of this,” he was quoted as saying.

He also called for the resignation of Speaker Abdul Maseeh Mohamed, who he singled out for blame.

According to local media, former President Maumoon Abdul Gayoom, who heads the PPM, also urged the government to reconsider the decision on the PPM MPs’ Viber group.

“Such a drastic and unplanned step as cutting subsidies on staples is alarming and raises huge concerns about our true fiscal status,” Gayoom’s son, MP Faris Maumoon, tweeted yesterday.

The former strongman is locked in a power struggle with the incumbent president for control of the PPM. Gayoom’s long-rumoured rift with his half-brother became public in July after he accused ruling party lawmakers of facilitating corruption and reversing democratic reforms.

The Jumhooree Party meanwhile joined the chorus of concern over the subsidy cut today, calling on the government to reintroduce it and eliminate wasteful spending instead.

The party said it was “extremely concerned” over the unprecedented price of staples in the atolls at a time when the fisheries industry is performing poorly.

Several island councils have also put out statements today calling on the government to reconsider the decision.

The government sought to justify the move citing longstanding recommendations by the International Monetary Fund and the World Bank to target subsidies to the needy.

Appearing on the state broadcaster Television Maldives last night, Economic Development Minister Mohamed Saeed claimed that 41 percent of the food subsidy was enjoyed by migrant workers and tourists.

Such a high expenditure out of the state budget to benefit foreigners was unfair, he said.

He also reiterated the claim that disregarding the IMF and World Bank’s recommendation prevents the government from securing foreign loans for infrastructure projects.

But the opposition has dismissed the claim, accusing the government of mismanaging the economy, and advocating for the introduction of a progressive income tax in lieu of increasing the cost of living for the poor and middle class.

The bulk of rice, flour and sugar sold in the Maldives is imported by the STO and distributed to retail shops at prices set by the economic ministry, which announced new controlled prices on Friday.

The poor is set to receive a monthly cash handout of MVR40 (US$2.6) per person and MVR240 (US$15.6) per household to buy food, the government has said.

The National Social Protection Agency set up tables at four locations in Malé this morning to collect subsidy registration forms, prompting long lines of people to queue up.

Some 15 percent of the nearly 350,000-strong population live below the national poverty line of US$2 per day, according to figures from the Asian Development Bank.