The Government has stopped several major development projects after deciding to cut 20 per cent of the government budget expenditure. These projects include construction of harbours, housing, schools, water, sewerage systems, erosion protection, stadiums and jails. The cut will amount to Mrf 191 million mainly from the public sector investment programs. There will be a deficit of more than Mrf 300 million even after the 20% cut. The Government made this hard decision after it could not get the projected income from some mega projects. Former Finance Minister Gasim Ibrahim and Economic and Trade Minister Mohamed Jaleel resigned recently after they were criticized by the People's Majlis about the failure to raise the finance for the Mrf 12 billion budget passed for this year. Former Finance Minister convinced a concerned Majlis he will raise the finance and Jaleel too pledge his confidence in the projects.
The largest reductions came from Ministries of Housing, Construction and Atolls Development amounting to Mrf 32 million and Mrf 23 million and Mrf 20 million respectively while the smallest reduction was suffered by Ministry of Health and that amounted to Mrf 5.8 million. Reductions from other ministries were Education Mrf 15million, Environment Mrf 14 million, Transport Mrf 6.4 million, Youth Ministry Mrf 4.5 million and Male' schools Mrf. 3.6 million, Such cuts delaying some urgent projects to provide essential services to the people especially in the atolls would be very costly to the Government during a year when a historic presidential election will be held, and improved basic services needed for the people are guaranteed by the new Constitution under the chapter of bill of rights.
The budget was criticized by Auditor General Ibrahim Naeem in a report to the Majlis, and he said the budget will have a deficit of Mrf million 4.4 because of failure to raise the money from the mega projects. He was critical of the policy of Finance Minister to decide the budget on the basis of finance not available.
The decisions to have a 20 percent budget cut was reached by the cabinet after the new Finance Minister Abdullah Jihad recommended a series of austerity measure to ease the huge deficit. The measures also came at a time when the country was facing high inflation and economic difficulties due to soaring oil price and food shortage. Minister Jihad who was Governor of the Maldives Monetary Authority and who served as State Finance Minister knew he has taken a difficult task at a difficult time. Hence he was quick to take all measures that could help the situation and thus the 20 percent cut was decided by the government soon after Jihad assumed office.
The Government has taken several other measures to reduce government expenditure. These include a cut of 15% from the salaries of Chief Justice, Speaker of the Majlis Cabinet and other ministers and dignitaries of ministerial rank state ministers and deputy ministers and those officials in that rank. Government offices have also been asked not to work after 6 in the evening in order to save electricity and overtime expenditure. Travel of Government ministers and officials have been restricted to the minimum. Celebrating various occasions have been reduced accordingly.
Former Finance Minister Gasim Ibrahim was trying to lease 30 more islands for development of tourist resorts but this proposal met with stiff resistance from many quarters who viewed them as short-sighted. It was one of the major reasons why the former Tourism Minister Dr. Shaugy has to resign just over a month ago. It is however very likely more islands will be announced for developing as tourist resorts to generate more revenue.
Finance Minister Jihad told last night he is trying his best to stabilize the situation and he is very hopeful of reducing the budget deficit considerably. He also said Government is working to find possible additional avenues for generating more income.
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