Government proposes MVR 16.4 billion budget for 2014

Government has proposed a MVR 16.4 billion (MVR 16?410?803?668) State budget for 2014 to parliament today.

For 2013, the government proposed a budget of MVR 16.9 billion, but the parliament cut down the figure to MVR 15.3 billion, resulting in several austerity measures to reduce expenses.

Presenting the 2014 budget to parliament, Minister of Finance and Treasury Abdulla Jihad said the recurrent expense expected to be MVR 12 billion, 73 percent of the total budget.

Half of the recurrent expense will be spent on salaries of government employees, with the remaining spent on providing subsidies, paying interests of financial loan and administration of offices.

Finance Minister said 27 percent of the budget is reserved for capital expenses, with a majority on Public Sector Investment Programs and repayment of financial loans.

The government is predicted to earn MVR 13.9 billion as revenue and grants, which includes MVR 10.2 billion in taxes and no-tax revenues of MVR 3.5 billion. The budget also predicts the government will gain additional MVR 2.3 billion if the parliament passes the legislature needed to increase State revenue.

Finance Minister proposed 6 areas that the government can increase its revenue today. The areas include; reviewing the import duty, increasing the Tourism Goods and Services Tax (T-GST) to 12 percent, continuing the tourism tax to be abolished by the end of the year, increasing the airport service charge from $18.5 to $25, leasing more islands for resort development and imposing a GST on telecommunication services.

The six areas to increase government revenue were also proposed to the parliament in 2013, but were rejected.

Finance Minister Jihad said the budget deficit for 2014 is predicted at MVR 988 million, a 41 percent decrease compared to MVR 1.7 million deficit in 2013.

The government plans to reduce the deficit with MVR 732 million in international aid and through MVR 256 in domestic finances.

For 2014, a total of MVR 2.2 billion is budgeted for the education sector, MVR 1.7 billion for the health sector, MVR 2.2 billion for welfare and social security and MVR 5 billion for the atoll development.

A total of MVR 2.5 billion has been allocated for Public Sector Investment Programs (PSIP).

The budget proposes MVR 1.9 billion for the atolls and a further 923 million for harbour, sewage and waste disposal system projects. Finance Minister said harbour projects for 10 islands will be financed through international aid. Finances for 36 ongoing harbour projects have also been included, along with money for sewage system projects for 23 islands and fresh water systems in 6 islands, the Minister said.

Government has allocated MVR 832 million for housing, with further finances for mosque development in 25 islands and MVR 357 million for health and sports PSIP programs, in the State budget proposed for the year 2014.