State Budget for 2020: What are the government's targets?

A drone shot of Addu city Hithadhoo in the south of Maldives. (Sun Photo/Fayaz Moosa)

The state budget for 2020 was presented to the Parliament today by Finance Minister Ahmed Ameer. The budget of MVR 37.50 is the first budget by the current administration of President Ibrahim Mohamed Solih that is presented to the Parliament.

Minister Ameer presented a budget totalling MVR 37.50 billion with a deficit MVR 5.68 billion. The Minister estimated that MVR 29.92 will be obtained through grants and aid.

So, what are the government's targets for next year with this budget?

Minister Ameer revealed in the Parliament today that the government was focused on six main areas with the new budget.

The first and foremost is establishing the basic and necessary urban infrastructure. The government plans to establish water and sewerage systems on every inhabited island in the country to achieve this, according to the Minister.

Secondly, the government is focused on enhancing the services provided by the government to a level that is acceptable to the general public. The Minister stated that the plans to establish five regional hubs in different parts of the country fall under these plans.

“We have allocated a massive part of the budget to enhance the health services provided in different parts of the country. Projects to establish five tertiary hospitals in the five regional hubs of the country will be run in order to do this,” said Minister Ameer.

Diversifying the economy and paving the way for more economic activities is another focus of the state budget for 2020. One of the most notable projects under these plans is the relocation of the commercial port currently in Male’ city to Gulhifalhu and the terminal work of Velana International Airport, the Minister pointed out.

Gulhifalhu seen from a drone shot taken in K. Villingili. The government has plans to move the commercial harbor in Male' to Gulhifalhu and was included in the state budget presented to the Parliament on November 4, 2019. (Sun Photo/Fayaz Moosa)

Empowering Councils financially through the decentralization system is the next focus of this budget. The Minister stated that the planned block grants for councils would see councils more empowered and financially independent to develop their constituencies.

The Minister stated that the government’s focus with this budget is last but not least on developing the economy through the Fiscal budget policy. The Minister cautioned that government spending needed to be curbed and if not, that the economy could be negatively affected.

The 2020 budget was described by the Minister as a realistic budget.

What other projects are included in the budget?

One of the most notable projects included in the budget is the government announced 20,000 housing units for MVR 600 million planned to be started next year. The project is targeted to bring an easement to the housing issues faced by Maldivians and around MVR 359 million has been allocated for housing projects in different islands throughout the country.

Projects for inexpensive housing in islands have already commenced with 5000 housing units currently under construction. Rents for these units will be capped at MVR 6000. The government plans to assist the owners of the abandoned land and houses in islands and provide inexpensive loans for these citizens to finance housing projects.

The budget also has plans to raise the Airport Development Fee charged from Business class travelers as well as the Service charge from Velana International Airport. Plans to facilitate the sale of migrant quotas are also included in the budget.

The Airport Development Fee is currently charged USD 12 from every local and USD 25 from other nationalities.

Flights on the tarmac of Velana International Airport. The government is set to increase the ADF charges and Service charges from the Airport as included in the state budget of 2019 that was presented by Finance Minister Ameer on November 4 to the Parliament. (Photo/MACL)

Migrant quotas which are currently issued without a charge will be issued for MVR 2000 per quota starting from next year. An extra MVR 100 will also be charged on top of the work permit fee of migrant workers.

Import duties from products such as cigarettes are also planned to be raised while some products will see duties slashed through the amendments that the government is preparing to propose to the import duty laws of the country.

Income tax on citizens will also be collected from next year and changes to bank profit taxes are also planned. Banks would have to pay taxes in the form of BPT, which is expected to yield MVR 4 billion to the state.

The most ambitious project by the government 

The projects that are expected to gain the most attention are the proposed plans for a bridge to connect the greater Male’ regions and the relocation of the commercial port to Gulhifalhu.

MVR 411 million will be spent on the bridge to connect Male’ city and Gulhifalhu and MVR 247 million will be spent on relocating the commercial harbor, according to Minister Ameer. He noted that the country’s economy has been developing for years, but the lack of changes to the commercial port in Male’ city for the last 30 years.

“Over time, this has led to challenges in storing goods and transporting these goods to businesses,”

“The new port in Gulhifalhu will be developed so that it can be used by large cargo boats that travel in international shipping routes.” said the Minister. It will also allow the Maldives to stop depending on fielder boats that currently transfer goods into the country and reduce the duration of time spent on loading and unloading.

The Minister then stated that surveys are being conducted to connect Gulhifalhu, Male’, Villimale’ and Thilafushi with a bridge.