Population consolidation keystone of 2016 state budget

Population consolidation keystone of 2016 state budget
November 16 19:16 2015

All Maldivians should consider moving to big islands or urban centres for a higher standard of living, Finance Minister Abdulla Jihad said at the parliament’s budget committee today.

The dispersion of the Maldivian people in 188 islands is an obstacle to economic development, Jihad said, reiterating that the government’s population consolidation policy is to settle 70 percent of the population to Hulhumalé.

“What we want the most is to live, not just to stay alive. You can stay alive at an uninhabited island as well. But you can only enjoy a certain quality [of life] and a certain lifestyle in islands with large populations,” he said.

The cost of living is also comparatively high in the Maldives and the government does not get “value for money” for infrastructure projects in small islands, he added.

Due to economies of scale – the benefits of large-scale production – Jihad said the government could not afford to provide quality healthcare, education and utilities to small island populations.

According to the 2014 census, only four islands have a population exceeding 5,000 and only 20 islands have more than 2,000 people. The Maldivian population is 338,434, of which 38 percent resides in the congested capital.

Housing Minister Dr Mohamed Muiz said the government is also reclaiming land in 10 islands across the country for urban development.

Reclamation of 240 hectares of land in Hulhumalé earlier this year, social housing projects in the pipeline, and a project to connect the artificial island with Malé through a bridge are all part of the population consolidation plan, Muiz said.

After essential infrastructure is established in Hulhumalé and other chosen islands, Muiz said the government will provide opportunities for relocation.

Despite insisting that the government has conducted studies and formulated a plan for population consolidation, the ministers did not elaborate when pressed for details by opposition MPs.

MPs of the main opposition Maldivian Democratic Party (MDP) said the public should be informed of relocation plans well in advance as many people are building homes and making investments in their native islands.

MP Fayyaz Ismail said relocating the majority of the population to the Malé region would destroy the country’s 3,000-year-old cultural identity and its social fabric.

His constituents in Laamu atoll do not wish to move to the capital, the MP for Gan said.

Several MPs from both the ruling and opposition parties spoke in favour of population consolidation during the budget debate at today’s sitting of parliament.

The finance minister and housing minister along with Environment Minister Thoriq Ibrahim and Youth Minister Ahmed Zuhoor had met with the budget committee today to discuss the Public Sector Investment Programme (PSIP) in the record MVR27.4 billion (US$1.7 billion) state budget for 2016.

While MVR6.3 billion was allocated for PSIP projects in the 2015 budget, Jihad said the revised estimate is now MVR3.7 billion.

The full amount was not spent due to shortfalls in revenue and delays in securing foreign loan assistance, he said.

Several MPs complained that many projects included in the 2015 budget were not launched and have now “disappeared” from next year’s budget.

Jihad said the government prioritised including ongoing projects in the PSIP component and keeping the budget deficit low.

“We can’t go forward with the budget sustainably by always adding to our debt,” he said, noting that the government has to sell treasury bills to plug shortfalls in revenue.

Public debt is expected to reach MVR36 billion or 65 percent of GDP next year.

Of the unprecedented MVR9.1 billion PSIP budget for 2016, Jihad explained that MVR5.2 billion would be spent out of the state budget and the rest will come from foreign sources.

Some MVR3 billion of the “domestic PSIP” has been allocated for ongoing projects, such as harbour construction, sewerage, electricity and water.

“The remaining MVR2 billion is for the new projects,” he said.

Addressing concerns raised by MPs, Jihad said Maldivian state-owned and private companies have the capacity to undertake projects worth MVR2 billion.

The PSIP budget also includes MVR1 billion for development of the Ibrahim Nasir International Airport with loan assistance from Saudi Arabia and MVR562 million for the Malé-Hulhulé bridge project.

Other high-priority projects include infrastructure development in Hulhumalé phase two and development of the regional hospital in the southernmost Addu City, he said.

The budget committee’s chair, MP Ahmed Nihan, meanwhile asked MPs not to ask specific questions about projects in their constituencies. The finance minister will meet parliamentary groups separately to discuss projects, he said.

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