Centralisation crucial for reducing costs, says Finance Minister

Minister of Finance and Treasury Abdulla Jihad has emphasised the importance of establishing a policy on population and developmental centralisation, and said that the efforts to reduce government costs would not be successful as long as the population is scattered over 180 islands.

Presenting the Projected State Budget for 2015, of MVR 24.3 billion, to the parliament this morning, Jihad said that that a policy on centralisation must be put together and implemented as soon as possible.

He said that this is a difficult but crucial task, and urged the parliament to cooperate with the government in these efforts.

Jihad, who also served as Minister of Finance in the Maumoon Abdul Gayoom administration, said that costs increase due to the high expenditure on subsidies and social protection. He said that from the budget for 2015, MVR 5.8 billion would be spent on civil servants, while MVR 3.2 billion would be spent on subsidies and social protection.

“…Which means that out of every MVR 100 received, MVR 40 is spent on staff, and MVR 22 is spent on subsidies and social protection,” said Jihad.

He added that the financial positions of state companies were also deteriorating, and they depend on the state budget more every year.

Jihad said that 65 percent of the budget, or MVR 15.8 billion, has been allocated for recurrent expenses.

The total estimated government income and free financial aid for 2015 is MVR 21.5 billion. This is made up of MVR 13 billion as tax revenue, MVR 6.8 billion as non-tax revenue, and MVR 1.7 billion as free financial aid.