Amendment proposed to remove requirement for parliament approval for State borrowings

The government has proposed an amendment to the Public Finance Act, to remove the requirement of obtaining parliament approval for borrowings and guarantees by the State.

This amendment was proposed by Vilingili MP Saud Hussain.

The Public Finance Act presently states that the government shall obtain the consent of the parliament before borrowing money, providing guarantees, selling or leasing assets, and granting aid.

Detailing his reasons for proposing this amendment, Saud said that this requirement poses difficulties for the State in its daily operations, as well as in its efforts to provide basic public services.

The amendment, if passed, will require government offices wishing to borrow money, to obtain approval from the Minister of Finance, instead of the parliament.

The requirement to obtain parliament approval for State borrowings was introduced during the administration of former President Mohamed Nasheed. It was proposed as an amendment to the Public Finance Act by then opposition party, Dhivehi Rayyithunge Party (DRP).

The amendment was passed with votes in favour from MPs of DRP and People’s Alliance, and several independent MPs. It was ratified and enforced on 26 August 2010.

Prior to that, the State was required to obtain approval from the Finance Minister, and not the parliament, for borrowings.