Promising budget, but major concerns remain: MRM
The only thing that was done was to increase GST and TGST, according to MRM, as suggested by financial institutions and stakeholders as steps to boost revenue.
By
Ahmed Mizyal
Ruling coalition partner Maldives Reform Movement (MRM) has said on Tuesday that there are many issues of concern in the upcoming budget.
Parliament on Monday approved a budget of MVR 42.8 billion for the next fiscal year.
The party said in a statement expressing their take on the national budget, saying that it was an optimistic budget. The political party, however, pointed out that there were concerns about the budget on revenue generation and cost reduction.
Revenue generation needs to be explained
MRM said both the Maldives Monetary Authority (MMA) and the audit office had noted barriers to obtaining the estimated MVR 2.5 billion in grants in the budget approved for the next fiscal year.
"It is important to note that how to obtain the USD 1.5 billion or USD 100 million included in the budget has not been clarified," MRM said in their statement.
In addition, MRM said:
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While foreign lending and bonds are projected to receive MVR 6.4 billion to finance the budget deficit, the MMA’s receipts in the last six years have been an average of MVR 2.1 billion lower than expected
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This year too, MVR 7.5 billion was budgeted, but the expected receipt is MVR 4.9 billion; that is 35% lower than the budgeted amount
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If this money is not received as aid, the way to raise money to meet expenses is to raise money in the form of loans from the domestic market
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Even now, when the central bank printed MVR 2 billion without borrowing from the domestic market, the value of the Rufiyaa fell and the value of the dollar increased manifold in the black market
"Therefore, there is a general question as to what other efforts the government forecasts to achieve the projected revenue for the next fiscal year," MRM said.
The only thing that was done was to increase GST and TGST, according to MRM, as suggested by financial institutions and stakeholders as steps to boost revenue.
"This will also make the people more vulnerable and impoverished as they will have to pay a large part of their income to the state," the MRM said in a statement.
Spending cuts not prioritised
While financial institutions have suggested cutting down on public expenditure, MRM said the government has not prioritised cutting state spending in the upcoming budget.
The MRM has called for a revision of the policy of providing subsidies to the rich as well as the poor, and to establish a tax system that could ensure that only the deserving get the subsidies.
"The party believes that shifting subsidy funds to target subsidies and planning a way to provide target subsidies is an important step towards cost reduction," the MRM said in the statement.
Here are some of the recommendations made in the MRM statement:
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Revise subsidy disbursement
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Paying the country's current debt at the budget implementation stage, looking at how to control the country's inflation and how to raise more foreign exchange, and try to balance the budget
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Instead of borrowing money, MRM calls upon the state to retrieve the siphoned funds from the state in the last few years and to collect the dues of various industries to the state
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The cost of subsidising the people should be backed with the retrieved money
Another issue that MRM pointed out was that the amount of expenditure mentioned in the budget and the amount spent did not match. Pointing out that the budget passed and the revised budget and the expenses incurred at the end of the year did not correspond, MRM said:
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More than what was approved by parliament in 2010, 2011, 2013, 2016 and 2020 was spent
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Between 2007 and 2022, the government's recurring expenditure, the difference between budgeted and actual expenditure, averaged MVR 4.2 billion
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Even the supplementary budget presented this year has allocated MVR 5.8 billion, but there is not enough details of these expenditures
In addition, the law states that the supplementary budget has to be presented and approved separately, but the supplementary budget has been included in the budget presented for the past year and next year, MRM said. Pointing out that instead of doing so, it would be better to present and approve the supplementary budget and pass it, MRM said that the Auditor General's Office has also pointed out that this is the best practice.
