Good morning Ladies and Gentlemen,
Our government was elected on a platform of good governance and fiscal discipline. We campaigned as a centre-right party and we wished to roll back the state and unlock the potential of our people.
We set about our task to reform the country after seeing how broken the system was; and knowing that we could do better.
Autocratic rule, breakdown of law and order, human rights abuses, and rampant corruption defined the era that preceded us.
The flourishing of democracy has brought with it a number of important innovations.
We have separation of powers- an independent judiciary with a Supreme Court at its apex.
For the first time in the country’s history we have a legislature that is truly elected, and with representation from the entire political spectrum.
A number of independent institutions such as the Anti-Corruption Commission, the Human Rights Commission, the Auditor General’s Office and the Elections Commission exist which keep the government in check.
A free media encompassing newspapers, news websites, and television and radio stations are ever vigilant.
However, as you know only too well, the true picture is far from rosy.
We inherited a nation on the verge of bankruptcy. The fiscal irresponsibility of our predecessors has left a big black hole in the treasury.
Civil service pay was hiked up as a means of patronage,
Commercial loans were taken to pay for infrastructure projects in the islands with the intention of buying votes,
Contracts were awarded for such projects with no financing secured and just left to drain the budget,
Over sixty resorts were tendered out in a very thinly disguised auction, and the advance lease payments were used for consumption,
Furthermore, the exorbitant lease rents they were given out on the whole have become more of a burden on the successful development of that industry and those resorts,
State-owned enterprises are bleeding and in the instance of the electricity company, tariffs were reduced while fuel prices were rising.
Our debt, if the status quo was maintained, was set to shoot to over 30 percent of GDP. As you know, this is totally unacceptable levels.
Ladies and gentlemen.
These were not the actions of a prudent, responsible or competent government.
It is one of life’s ironies that it falls upon this government led by a party, as has been criticized, accused of being activists with little experience of governing, to put the house back in order.
It falls to us to act with responsibility and maturity; to make up for the shortcomings of the past.
But this is a challenge that we will rise to, and meet head on.
I did not seek this office to enjoy the perks or trappings of power, and neither did my colleagues.
We stood for election on the basis of a programme of far-reaching reform as outlined in our manifesto.
Our government came into power with a vision. We want to give people the opportunity for a decent life. And we want to live within our means.
Our development plan is one that is both equitable and sustainable.
Anyone following developments in the Maldives will be more than familiar with our five pledges:
Bringing down the cost of living,
Providing affordable housing,
Setting up health insurance available for all,
We want to close down all doors to drugs, and
We want to lay down a nation-wide transportation system.
These pledges will be delivered within a sound economic framework.
As I am sure you will accept, we created history one year ago.
A homegrown democracy movement in a Muslim country took on a thirty-year old autocratic regime with deep roots in society and the strong backing of the establishment; and still we emerged triumphant.
We have been lauded for this achievement, and that is well and good.
HOWEVER, the REAL revolution is the one we are about to institute. I am referring to the overhaul of our entire economic and social system of this country.
Let me spell out our vision in very simple terms and how we intend to achieve it.
We aim to roll back the state and redefine its role from a provider of services, to a regulator and a facilitator.
Our pledges will be delivered through public-private partnerships and the government will institute measures that attract greater investment; both from domestic and foreign sources.
We will take measures to diversify our economic base to create more jobs in the private sector.
A social safety net will be instituted to ensure that none of our citizens fall through the cracks and that the state will back up those who need assistance.
My colleagues will go into the details of our proposals in their presentations; but please allow me to expand a little bit on these points.
The former regime maintained an unwieldy bureaucracy to prop it up. Out of Rf. 7 billion earned in government revenue, the government wage bill accounts for Rf. 5 billion.
We aim to halve the total number of civil servants and ensure that only those necessary for the state to function effectively are retained.
A programme of corporatization and privatization has been launched and it covers (1) State-owned enterprises (such as the electricity company, the water company and so on), (2) Social services such as schools and hospitals, and (3) new corporate entities such as regional utility companies and the waste management company.
The introduction of the private sector will, in addition to alleviating the budgetary situation, also result in greater efficiency and better quality of services.
We will diversify our economic base and introduce new products in fisheries, such as aquaculture and mariculture; and in the tourism - guest houses, luxury villas and cultural tourism products will be introduced.
The Madhana social security programme currently covers 48,000 people and the number is set to double by the end of this year.
Those over 65 years of age are provided a state pension of Rf. 2000 per month.
The Human Resource Ministry has begun a Technical and Vocational Training Programme (TVET) to train 5,000 people for the job market.
Of course, we will consult with you and we will seek your assistance in these endeavors.
As the Country Manager pointed out, we understand that the bank has limited IDA facilities for the Maldives.
However, $14 million is simply not enough.
We have a fair amount of work to be done. We are moving from feudalism to political pluralism.
There is a civil service that was formed on the basis of feuding feats. To relinquish that we will have to be observant, we would have to be mindful, we would have to be extremely clever – we would, perhaps have to more clever than we have ever been.
However that civil service was created, we have to understand that civil service represents, in a sense, the most competent sectors or group of people in this country.
We want to reduce them. We want to leave them. We want to – lets not mince words, call spade a spade – we want to fire them.
No sane politician would do that without a proper redundancy programme. This redundancy programme is going to cost us – its going to cost us more than 200 million dollars. But that is going to be a cost on us this year and next year. That will reduce the civil service to 18000, hopefully. That will bring government payroll to nothing more than 3 billion.
At the same time, we are also introducing revenue measures. We are asking the business community to pay taxes more lavishly.
So we are, at the same time, not making many friends in the business community, neither are we making any friends among the public.
While we do it, if the international community cannot be with us, if they cannot back us, and if they have a very long story about IDA, I am so sorry. I spoke to the Bank Vice President, I mentioned to her, ‘please, I do not understand the IDA story’.
But there must be way of finding funds. If we cannot find these funds, well, we will still go ahead and do it. But we have to be braced, then, for the worse. It will be pitched right on the streets of Male’, and even if we don’t do it will be pitched on the streets of Male’.
The pressure on the fixed exchange rate, the increasing budget deficit, we cannot sustain that. So either way we die. Well, I’m told, to be born again, first you have to die.
We will have to come up with these funds. If the Bank, the IMF and the Asian Development Bank can’t help us, and if the good European governments can’t help us, of course, it is going to be very difficult on us. But we will still do it.
But please be mindful, when we do that under these circumstances, the results might not be as smooth as we all thought it would be.
It won’t be in anyone’s interest to see the Maldives fail. We sit strategically in the middle of the Indian Ocean. We have religious radicalism; we can very easily be a hub for international terrorism, money laundering; and all sorts of such vices.
We have to be mindful. I do not believe and I honestly do not think that good bankers like yourselves would think that we can turn this around ourselves – by ourselves and without your help.
So the point is not to focus on figures and to limit ourselves in imagination. The point is, let’s see what needs to be done and let’s hope that we can come up with the funds necessary for that.
I can, as I am known to, go on and on.
But the point is very simple. We want to reduce the civil service – we cannot go on like this. Our revenue, government tax revenue is 700 million dollars at the most, out of that, presently we are paying 500 million dollars to the civil servants. We are left with nothing for development and even to run the country.
We will have to turn it around. We have to be in a position to have a tax revenue kitty of, let’s say, at least 800 million dollars.
By changes to the tax regime, this is quite achievable in this country.
By changes to civil service structures, that is also quite achievable in this country.
We also want to move away from the present subsidy formats. Presently we are subsidizing universally – the government subsidizes state owned enterprises, and through the state owned enterprises we keep cost of food, electricity, water and other utilities down.
We feel that this is extremely unfair – we are subsidizing both the very poor and the very rich as well. For instance, the government is paying more than 200 million dollars on food subsidies to State Trading Organization. They reduce the price of rice, but this reduced price is also not only paid by the very low income, but also by the resorts as well.
We want to raise the price of food. We will raise the price of food. But we would also want to subsidize the needy – we want to target subsidies.
We will raise the price of electricity – but we want to target the poor.
We have been able to build a very good health insurance scheme – its in its very tender stage. We hope to improve on it and we hope to give coverage to the whole country.
When we took office, more than 106433 people of this country – a good third of them – were living below the poverty line. They were earning less than US$1.50 a day. We have to be able to give them coverage. We have to take care of them – that is our message when we restructure the civil service.
Why should the government be spending 500 million on just 38000 people, while we have the rest of the country untended for?
I think we have the proper political messages. We feel confident. We have come against the odds in the past, and we hope and we still believe that we will be able to win it. Come out home dry and winning.
I am sure, with your technical support, never been in a room full of so many bankers, I am sure, with your good technical support, with your minds, we will be able to find solutions.
Its one thing that you are either able or not able to give us the money, but it’s another thing to be friendly. But we hope that you will be able to contribute to our programmes.
We have also been accused of not been very clear with our vision. The vision thing is very simple – our manifesto is the vision. It is very clearly laid out, and you can never have better consultation process for any project than our manifesto. We spoke about it in every single household. The people gave us the opportunity to rule this country, we believe, only to pursue the objectives laid down in that manifesto. Nothing else.
We cannot now go back and stick to, I understand number lending agencies, multilateral agencies have done a fair amount of work in the 7th National Development Plan. I understand that you will not be familiar with our manifesto because you had very little role in coming up with it. But the people of this country had a huge role in coming up with it. We have to stick to that manifesto.
I am thankful for the UN System – they are building up a working plan for our manifesto. We would soon come up with a work plan for that, and we hope to have a very bright future – we really do hope to have a bright future. But the minute I say this, I am sure a lot of people would be telling me, ‘who are you trying to kid?’
But we have to come out of this, and we have to come out winning.
Again, as I end, I believe, with your assistance and with your help, we will be able to come home dry and winning.
Thank you very much.
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