State of the Maldivian economy: Who’s lying? President Nasheed or Maldives Monetary Authority?
The state of the Maldivian economy has declined sharply since November 2008. The Maldives Monetary Authority reported in May 2009 that the real economy has decelerated in 2009. The MMA’s April 2009 Quarterly Economic Review projects that GDP growth rate will be -0.3% in 2009, as compared to 5.8% in 2008. It projects that real output will contract by 1.3% in 2009. The MMA forecasts tourism to decline by 11% in 2009 while the construction sector is projected to decline by 24%.
This tale of economic collapse continues, as the MMA reports that consumer price inflation in March 2009 was 11.2%, much higher than the 8.2% inflation in March 2008. However, President Nasheed speaking to press on May 20th, just days after this MMA report, stated that his government had brought national inflation down from 12.06% to 10.38% since last year. Inflation is mostly contributed by the price of food, transport, health and housing. The MMA report used data up to May 5.
President Nasheed also told press on May 20th that the number of upmarket tourists had not declined much. He noted that the number of midmarket arrivals had fallen. The President’s Press Release of the day notes that President Nasheed “did not find this decline alarming”. However, just days before President Nasheed declared his lack of concern the MMA reported that tourist arrivals fell by 11% in the first quarter of 2009, as compared to the corresponding period in 2008. Similarly, bed nights also decreased by 9% during the period, and the capacity utilization of the industry dropped to 85%, as compared to 94% in Jan-Mar 2008 (MMA, May 2009).
Nasheed (left) with Finance Minister Ali HashimSpeaking on fisheries, President Nasheed failed to mention that, although the country had relatively good catch during the first quarter of this year, fishers had to throw away their valuable catch. According to the MMA, cumulatively, during the first three months of 2009, fish catch increased by 8 percent from 25.5 thousand metric tonnes to 27.5 thousand metric tones. However, fish purchasers such as the government company Maldives Industrial Fisheries Company were ill prepared to purchase this catch. MMA reports that fish purchases by commercial buyers plunged by 45% from 15.1 thousand metric tonnes in Jan-Mar 2008 to 8.3 thousand metric tonnes in Jan-Mar 2009. This means that, where in 2008, fishermen were able to sell 59% of their catch, in 2009 only 30% of their catch was bought. This would thereby halve their income for the period, as compared to 2008.
The volume of fish exports also sharply declined by 54% compared to the corresponding period of last year. Similarly, earnings on fish exports also took a nose dive, falling by 54% from US$40.6 million in the first three months of 2008 to US$18.6 million in the same period of 2009 (MMA, May 2009). This is a $22 million reduction in export earnings to the country in just the first three months of 2009.
In his briefing on the state of the Maldivian economy, President Nasheed didn’t mention the collapse of the construction sector, a key driver of growth over the last 5 years. The MMA attributes this collapse (a 24% drop) to the government’s financing difficulties with its capital projects, and due to slow down in tourist resort development projects.
To cap it all, the overall deficit of the 2009 government budget (minus the recent supplementary budget) is projected to be Rf. 4.8 billion (28% of GDP). Total revenue is projected to decline by 9%, while total expenditure and net lending is projected to increase by Rf 1.9 billion (71% of GDP). The decline in revenue comes mainly from the decline in import duty and tourism bed tax. This is in contrast to an increase in revenue in 2008 by 5%, with a budget deficit of Rf. 2.2 billion (14% of GDP). Total expenditure and net lending in 2008 was equivalent to 63 percent of GDP. The MMA reports that the government expects to finance the 2009 budget deficit from external (70%) and domestic sources (through adoption of the proposed new revenue measures).
On top of this, in mid May, President Nasheed’s government passed through parliament a supplementary budget of Rf. 12.5 billion. Although this was 8% less than what the government initially proposed at the beginning of the year, the supplementary budget itself has a Rf. 2.23 billion deficit. This takes President Nasheed’s cumulative budget deficit for 2009 up to Rf. 7.03 billion. This brings the 2009 budgetary deficit to an alarming 41% of GDP.
President Nasheed came into power with continuous criticisms of what he called the Gayoom government’s “high” budget. These criticisms were most severe in mid 2009, primarily aimed at the then Finance Minister Gasim Ibrahim. Nasheed’s crony MP Ibrahim Mohamed Solih of Nasheed’s Maldivian Democratic Party (MDP), MDP MP (Jesus) Hassan Afeef and MDP MP (Reeko) Moosa Maniku were the most vocal in calling for Gasim Ibrahim’s resignation citing mismanagement of the budget. It is to be recalled too that even then, Auditor General Maakun Naeem stepped in with his staunch support to MDP.
President Nasheed with Auditor General Maakun Naeem (left) Maakun Naeem quickly released a hastily done audit of the 2008 budget up to the time that the MDP launched its attack in parliament. This two pronged attack largely triggered Gasim Ibrahim’s resignation as Finance Minister last year.
President Nasheed’s core election promises included slashing government spending and increasing government revenue. As can be seen above, under President Nasheed, government spending has not been slashed, but on the contrary, increased by more than 30%. Revenue generation is projected by the MMA to decrease by 9%.
Foreign investment and grant aid were promised by Nasheed as his sources of revenue. Speaking at Dhaalu Kudahuvadhoo on March 16, President Nasheed told the public that a lot of foreign investors were interested in investing in the country (President’s Office Press Release #2009-240). Speaking at Alifushi on April 19, President Nasheed also stated that “the foreign company bringing the harbor would be coming the very next day”.
However, as with the 25,000 social housing units he announced in November 2008 as donated by the Chinese Government, these foreign investors too have yet to show up. Within a few days of Nasheed becoming president, the 25,000 free public housing units metamorphed into 10,000 commercial flats. The promised donation by the Chinese Government is no longer mentioned by the Nasheed government. The promised flats are now reportedly on offer for any foreign investor wanting to invest into housing in the country.
Speaking at the parliament opening on March 2, President Nasheed said he did not believe that it is viable to provide basic utilities from the government budget. He said that this money would come from public private partnerships. “Our aim is to secure investments at least 500 million U.S. dollar to achieve these objectives”, President Nasheed stated (President’s Office Press Release #2009-195). This appears to be in addition to the US 300 million dollars in free aid promised by President Nasheed in his first budget. The promised 300 million dollars of free aid turned out to be a Rf 203 million loan taken by the Nasheed government from the MMA in November 2008. This was quickly followed by a Rf 208 million loan last December, and a Rf 176 million loan in January this year, all from the MMA.
In the same speech on March 2, President Nasheed remarked that expenditure was higher than revenue for most of previous government’s tenure, a statement that is shown to be untrue according to MMA long term statistics. Nasheed reiterated his government would execute solutions to what he saw as the country’s economic and fiscal situation (President’s Office Press Release #2009-195). As can be seen, President Nasheed’s solutions include a first budget with a deficit of Rf 7.03 billion, which is Rf. 4.83 billion more than Gayoom’s last budget deficit.
The Nasheed government will be taking the country into deficit by a further Rf. 7.03 billion although it will be earning 9% less revenue than 2008. Further, with GDP growth now projected to fall to -0.3% compared to the 5.8% growth in 2008, the Nasheed government will be taking budget deficit up to 41% of GDP. This is a dangerously high level. It is a 34% jump from Gayoom’s 2008 budget deficit of 14% of GDP. Perhaps President Nasheed’s promised revenue solutions are the currently increased fines levied on the general public, and his recent whole sale pardoning of millions in over due tax payments by the tourism sector which financed MDP’s war on Mr. Qayyoom.
Nasheed being congratulated while industry kingpin Koli Mohamed Maniku looks on.The question to the public is whom they will believe on the state of the Maldivian economy, President Nasheed or the Maldives Monetary Authority?
June 4, 2009 6:42 PM
Great post, RN. And this is the Change that maldivians voted for? Travel back to the dark ages where we scavenge for food? Really begs the question,are Maldivians really that stupid and uneducated so as to vote for this idiot? or was there something else behind the final result?
June 4, 2009 6:49 PM
Wow and double wow!! This is truly a masterpiece. Mind-boggling analysis of MDP's rhetoric versus reality. This use of official data to disprove President Nasheed's UK-taught spin doctors' lies is a landmark achievement for any journalist, let alone one from such a fledgling outlet as Raajje News. No question about it, it's in black & white: Nasheed's government is lying through their teeth. Thanks for this expose' RN team!
June 4, 2009 6:49 PM
yeah, the maldivian economy fell like a sack of hot potatoes when president nasheed stepped in. ali hashim as noted in an earlier article on RN is just like his father DIK, a misery in finance. this is not the change maldivians voted for. we need to end this misery of the economy. thank you RN team, for informing us all.
June 4, 2009 7:01 PM
Egad! what actually is Ali Hashim's qualification for Finance Minister portfolio? is he a statistician? and accountant? a BA in econ? what? how can he look on while his country goes down the drain? is he as dimwitted as he looks in the pic? Poolog where are you?
June 4, 2009 7:09 PM
spin-doctors and midwives are not what we need right now. get us some clever economists and let them give a thorough check of the collapsed economy here and prescribe some good strategies. ali hashim should work hard to get things 'aiy foaraa fashah'. everything except dhivehi verikan is sky-rocketing. verikan here is aiy-foara fashuge verikameh'
June 4, 2009 7:11 PM
Bala, gaimu aiy eothee foaruvaafa ennu? Aiy e foaruvee dhaulathuge khazaana dhavaalan! Ekan eba kurey hama rangalhah. Poolog we miss you.
June 4, 2009 7:57 PM
Wow, What an expose! Truly mind boggling. RN team, this is constructive criticism unlike the crap one gets to read about the Maldives on the internet. Great research. Great presentaion. The messege gets across without a hitch. This is an alarming situation. We are virtually on the brink of an economic collapse. This information should not be restricted to readers of RN only. The messege has to be carried across to every nook and cornwe of the COountry and into the board rooms of the World Bank, IMF etc. This is an SOS. It must reach everyone without delay!
June 4, 2009 8:15 PM
Hello, Where's Dr. Dhaiyygoani & HRH Dr. Angafindhu ? President Nasheed, please remove these arse-holes from the Ministry of Fisheries and give them jobs they can do (if you have to drag these baggage behind you) befo they send the fishing industry kota-uda. Poor Maldivian fisherfolk. They are under the impression that there is no fish in their waters. heh heh
June 4, 2009 8:19 PM
"No fish in their waters"? what is missing is brains in Ganjabo's head!
June 4, 2009 8:58 PM
great post...i agree with the writer. better than auditor general makunbeys reports.
June 4, 2009 9:01 PM
Yes thank you RN! Please ensure this gets maximum coverage. Our country is being run into the ground by this pack of scavengers. Their greed has dragged Maldives to the brink of precipice. All they care about is amassing their own wealth, and the devil take the hindmost.
June 4, 2009 9:14 PM
Excellent reporting, guys! Now the Maldivian people are beginning to imagine what President Nasheed might do with his left hand and with his right hand...
June 4, 2009 10:00 PM
I truly hope that the Majlis Maliyyaa Committee will get into action and make Ganjabe accountable for this sorry state of our economy. Why doesn't Haveeru etc give us info like this? Sad thing is only few can access these reports such as RNs. Maybe someone can try and get such info on radio? like Capital or Dhi Fm. Please try. Maldivians need to know the truth. NOW. Not 5 years later.
June 4, 2009 11:08 PM
My question is how is Nasheed getting away with all these lies? i don't see anyone really making him accountable.
June 5, 2009 12:53 AM
How can anyone make Anni accountable when only his cronies and relatives are in high posts? During the previous government, everyone especially the so-called "technocrat" Ministers were so politically cowardly only a member of the-then opposition MDP could be considered qualified for an independent post. See where that policy of appeasement has got us now? Has the Nasheed regime reciprocated even a tiny bit? Look for yourselves and guess the answer.
June 5, 2009 4:55 AM
Yes Anonymous @ 12.53 I totally agree with you. Flat Dhombe cannot be made accountable because all so called independent commissions and independent offices are filled with his stooges. All are MDP. Look at Prosecutor General Muiz, his close buddy. Muiz, Sood and Anni and Iboo used to have lunch together every Thurs at Nasandhura. They are close bunch. And look at Human Rights Commissioner Saleem. His whole family are MDP radicals as he himself is. As for Civil Service Commision Chief Latheef, Anni has him by the balls on coruption charges when he was Education Minister. Anti Corruption and Maakun Naeem we already know. I only hope parliament will display some guts and make sure the Chief Justice post goes to an independent. U wait and see we'll see people like Jesus Afeef and Modi take over the independent commissions. This whole democracy thing is a farce.
June 5, 2009 5:55 AM
The change they spoke about is very disappointing. Now MDP is nothing more than a FART which smells real bad.
June 5, 2009 11:54 AM
Yes I too hope the Parliament will show some guts & execute it's constitutional mandate to make this Administration fully accountable. This article MUST reach them. There is no bigger crime an administration can commit than to neglect and failing the people who voted them into Government. What have they done for us in their 7 months in power? ABSOLUTELY NOTHING. Nasheed's Administration has failed the Maldivian people. They should resign and fuckoff!
June 5, 2009 12:35 PM
RN ... we need to get these high quality articles across to the World Bank, the IMF SAARC and the UN (not UNDP/MDP hq in Male' of course). these articles will show the world what a cowardly and ghastly breed the current mdp govt is. please forward itto international media and dip embassies.
June 6, 2009 10:12 AM
Thedhu vaahaka eh! Maa fonivefa Anni akee emeehun kahala meehkey kiyaafa aharemenge machchah meenaa gadhakuruvi faranjeennah dhakkan vejje emeehunge reyvuntahkuge natheejaa. Emeehunneh nooney halaakuvegen dhaneeky mioh konme gotheh heyo verikamakun!
June 6, 2009 4:16 PM
Too true! We are losing everything our forebears have worked so hard to build, but it's not as if these Englishmen who have foisted their lackey on us will care a whit for what the people of this country need. They now have everything they need: a puppet who will soon cede to them a place to build another staging area instead of Diego Garcia which they are now losing. Why can't they clean up their own backyard first? It's not as if they even have a legitimate Parliament any more, with all of them now shown to be the models of Good Governance (of shameless defrauding of taxpayer money) they are.
June 6, 2009 7:48 PM
@ 12.35, definitely not UNMDP office in Male'! Thos UNers have spent all these years giving Anni's family jobs in their organisation. They've all been brainwashed yellow by now. No use even presenting any evidence of corruption to them, without even looking they'll say these are growing pains and must be allowed...
June 9, 2009 11:12 AM
ey neynguneetha? Male ga UN ofeehuga vazeefaa dhenee anni noonee Laila ge aaila tho balaafa ekani!
June 9, 2009 11:52 AM
yes. RN, we should be delighted to see alist of anni/laila connections at UN (mdp) male' hq. these guys should be reported to the UNHQ in new york. it will show them the daylights! dont u remember... they evn hid ahmed abbas (hudhu thunbulhi) at UN male hq when the police were searching for him!