Record budget passed after opposition boycott

Record budget passed after opposition boycott
November 22 13:56 2017

Parliament has passed an MVR27.9 billion (US$1.8 billion) budget for 2018 with less than half of the 85-member house present for the vote.

After a final debate, the record-high budget was passed with 39 votes in favour exclusively from ruling coalition lawmakers. Opposition lawmakers, who have been protesting in the chamber since August, boycotted Wednesday’s sitting.

Ahead of the vote, opposition lawmakers sought a Supreme Court order stating that a majority must be present for the vote. But the apex court refused to grant the injunction.

The constitution requires more than half of the total membership to be present for “voting on any matter requiring compliance by citizens” but ruling party lawmakers say the budget is a spending plan rather than a law.

The ruling party-dominated review committee approved the budget Monday without any cuts or substantial changes. A project to build a jail on the island of Kaashidhoo in Kaafu atoll was scrapped in favour of land reclamation on Huraa in the same atoll.

The committee also proposed two non-binding recommendations: awarding water, sewerage, electricity, land reclamation, housing, harbour and road construction projects to state-owned companies and regaining a majority stake of telecom giant Dhiraagu and 100 percent ownership of the Malé Water and Sewerage Company.

After boycotting the debate on the Majlis floor, opposition lawmakers criticised the budget in a series of panel discussions at the Jumhooree Party headquarters this week. With national debt expected to reach MVR43 billion this year, the Maldives could face bankruptcy due to the current administration financing its flagship projects with external loans, they warned.

But ruling party lawmakers praised the MVR7 billion worth of earmarked infrastructure projects as well as provisions for hiking civil service pay and reducing electricity costs and the price of staple foodstuff.

Excluding debt repayment, the government plans to spend MVR24.9 billion and collect MVR22.4 billion as revenue in 2018. The deficit of MVR2.5 billion would be 3.2 percent of GDP.

The government missed its deficit target in previous years. In 2016, the deficit reached MVR6.7 billion despite a projection of MVR3.4 billion.

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

A record MVR4.3 billion was also spent on debt repayment this year.

Presenting a supplementary budget for 2017 last month, Finance Minister Ahmed Munawar conceded that “a large portion” of income from new revenue-raising measures such as MVR1 billion from investments in Special Economic Zones and selling land in Malé would not materialise.

After projecting revenue up to US$100 million as SEZ acquisition costs for the past three years, the component was excluded from the 2018 budget.

The only revenue-raising measure proposed in the budget involves reducing the eligibility threshold for business profit and goods and services taxes. However, broadening the BPT and GST taxpayer base to raise an additional MVR850 million would require amendments to taxation laws.

With ten former ruling party lawmakers contentiously unseated, the ruling coalition lacks the majority needed to pass laws without opposition lawmakers in attendance.

New policy initiatives in 2018:

  • MVR370 million for the new Dharumavantha hospital due to open on July 26, including management and utility costs as well as purchasing medical consumables, machinery and equipment
  • MVR234 million for hiking civil service pay
  • MVR200 million for reducing electricity costs
  • MVR138.7 million for a school digitalisation project to provide a tablet for every student
  • MVR85.3 million for the presidential election
  • MVR50 million for reducing price of staple food
  • MVR50 million for celebrating 50th anniversary of second republic
  • MVR35.6 million for the Malé-Hulhulé bridge maintenance and operation
  • MVR30.7 million from Pakistan grant aid to renovate the People’s Majlis building
  • MVR16.2 million for providing assistance to persons without caretakers
  • MVR15.2 million for completing roll-out of the new education curriculum
  • MVR15 million for the ‘Get Set’ youth entrepreneurship loan scheme
  • MVR10 million for targeted electricity subsidies for the poor

Main projects in the Public Sector Investment Programme (PSIP):

  • MVR1 billion for the Velana International Airport’s new runway
  • MVR539 million for the VIA’s new terminal development
  • MVR462.6 million for the equity component of the social housing project
  • MVR447.1 million for construction of Dharumavantha hospital
  • MVR336 million for new domestic airports in Haa Dhaal Kulhudhuffushi, Shaviyani Funadhoo, Faafu Nilandhoo and Gaaf Dhaal Maavarulu
  • MVR246.6 million for Hulhumalé development project
  • MVR213 million for Malé-Hulhulé bridge
  • MVR134 million for phase two of OFID’s provision of water supply, sewerage, and waste management project
  • MVR107.9 million for reclaiming more than 10 hectares from 20 lagoons for commercial purposes
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