Nasheed speaks against increasing proposed budget for 2020

Speaker of the Parliament and former president of Maldives Mohamed Nasheed has stated that it is not appropriate for a government majority parliament to increase the budget proposed by the government.

Finance Ministry proposed a budget of MVR 37.5 billion for 2020. The Budget Review Committee 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.

Before commencing the debate on the budget committee's report during Tuesday's parliament sitting, Nasheed said the budget proposed by the government had a deficit of 5.8% against the GDP. However, the amendment proposed by the Budget Review Committee increases the deficit to 6.2%, said Nasheed.

"I don't believe a parliament that holds government majority should bring changes to the budget submitted by the government,'' said Nasheed, acknowledging the increase in deficit.

Nasheed added that while changes were brought only to the state's expenditure by the budget committee, the amendments does not mention any predicted changes to the state revenue. This is a matter of concern, said Nasheed. He added that it would take some time to implement the new taxes being introduced by the government, namely, the Income Tax.

"Current predictions show the Income Tax will be implemented about three months into the year," Nasheed said.

The Speaker said the debate on the bill will be concluded within the next two days. The current session of the parliament has been extended until this Saturday.

The budget review committee earlier said 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 an earlier session, 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.