Nasheed not in support of increasing proposed budget

Former President and Parliament Speaker Mohamed Nasheed has stated he does not support to increase the proposed state budget for 2020 in such a way that its deficit increases further.

Finance Ministry proposed a budget of MVR 37.5 billion for 2020. The Budget Review Committee has approved to increase the budget to a record 37.8 billion by adding an increment of MVR 366 million, which would increase the budget deficit from MVR 5.6 billion to 5.9 billion.

The additional funds will focus on development projects included under Public Sector Investment Program (PSIP) projects. The funds will also top up the budget allocated for some government entities. Therefore, recurrent expenditure will also increase.

While the estimated revenue for 2020 is MVR 29.92 billion, the deficit amount will be raised through the sale of a US$ 300 million Samurai bond to Japan, and through the sale of T-bills. Therefore, T-bills worth MVR 929 million will need to be sold to meet the requirement.

Referring to this at the Parliament on Wednesday, Nasheed said MPs have to carefully consider the committee's decision to increase the proposed budget by an additional MVR 366 million. While the proposed budget itself has a deficit of MVR 5.6 billion, further increasing the deficit would make it difficult for the government to implement the budget effectively. He described the committee's decision to approve the increment as 'irresponsible'.

"Re-allocating funds from one place to the other after discussion among members is sensible. However, I believe bringing changes such that it increases the budget deficit could potentially create challenges to implement the budget," said Nasheed.

Speaker Nasheed said the income tax bill and the bills on amending the laws on decentralisation must be completed before the budget is passed. The final debate on the budget is scheduled for Monday, said Nasheed.