Ministry of Finance takes major austerity measures
The Ministry of Finance issued a circular outlining seven major spending cuts.
Minister of Finance Ibrahim Ameer, Source: Ministry of Finance
On June 19th, the Maldives' Ministry of Finance issued a circular outlining spending cuts due to uncertainties relating to price hikes in the global economy. Aside from price increases directly related to the ongoing conflict between Russia and Ukraine, the circular states that rising interest rates across the globe have prompted the Ministry of Finance to make cuts in order to control expenses and avoid future burdens.
The circular sent out to Government offices highlights the seven major steps that the government will take to reduce expenditure:
- Expenses on the government employees
No new positions are to be created in any way that involves spending from the government budget, and no changes to employee pay are to be made unless they are approved by the National Pay Commission. It also states that no new allowances or promotions are allowed, unless approved by the Ministry of Finance. Finally, the circular encourages employee productivity and to avoid overtime work unless absolutely necessary.
- Travel expenditure
No official trips abroad are to be made unless all expenses are covered by donor partner, and the Ministry strongly advises that all foreign study tours and trainings held abroad to be halted. If it is absolutely necessary, approval from the Ministry of Finance is required.
- Purchase of inventory for office purposes
The ministry advises against purchasing office inventory unless absolutely necessary, and any purchase exceeding MVR 5,000 requires approval from the Ministry of Finance.
- Government administrative expenses
The Ministry of Finance strongly advises against incurring any new administrative expenses by offices unless absolutely necessary. Any expenditure in excess of MVR 5,000 would require approval from the Ministry.
- Training and educational expenses
There will be no new scholarships or training sessions unless the costs are borne by a third party. Training that is absolutely necessary and costs exceeding MVR 5,000 would require approval from the Ministry.
- Maintenance and construction costs
Construction or maintenance other than those approved by the President's Office or the Ministry of Finance are not to be started, and any new maintenance over MVR 5,000 requires approval by the Ministry of Finance.
- Capital expenditure
The Ministry strongly advises against making any capital expenditures other than those covered by PSIP, and if the necessary capital expenditure exceeds MVR 5,000 again the approval of the Ministry of Finance is required.
These measures are effective from 19 June 2022. The Ministry also stated that these measures are also applicable to all the Councils' expenditures through the block grants.
