Eva: Parliament will not issue a blank check to Finance Minister

Parliament Deputy Speaker Eva Abdulla, on Thursday, said that the Parliament would not issue a blank check from the State’s reserves, just because the Finance Minister happened to be a member of Maldivian Democratic Party (MDP).

North Galolhu MP Eva made the remark during the debate on Finance Minister Ibrahim Ameer’s request for a one-year stay on the limits set on the Fiscal Responsibility Act.

Now is the time for the Parliament to strengthen its oversight, she said.

Eva said that if the Finance Minister wished for a stay on fiscal limits, he needed to make a detailed report on how he planned to utilize the funds it will allow access to, both to the Parliament, as well as the Governor of central bank, Maldives Monetary Authority (MMA).

“This is not the 1980s to make decisions by looking at a person’s face. This is not how we plan to make decisions today.  The Parliament will not [facilitate] cash flow or issue a blank check based solely on friendship between me and the Finance Minister, or the friendship between me and the Governor, or because I and the Finance Minister belong to the same party,” she said.

Eva said the Parliament would ease the government’s cash flow troubles as soon as possible, but that in granting it, would enforce an extraordinary level of checks and balances, coupled with a strong reporting system for oversight.

She said the Fiscal Responsibility Act was one of the most important pieces of legislature keeping the State from toppling over.

“This very law is the first law which the opposition attempts to tamper with, and one of the first laws which are cast adrift whenever there is a change in government. The Fiscal Responsibility Act,” she said.

Eva said she concurred with Finance Minister’s statement that the government had no way of covering its budget amid the current crisis.

She said that the Parliament would provide its full cooperation to the Finance Minister and the President, but that the Parliament needed to be watchful.

Finance Minister has stated the government needed an immediate MVR 4.4 billion to manage its cash flow in order to maintain public services, fund healthcare services, and provide socioeconomic support to citizens over the next three months.

He asked that the parliament vote to on an one-year stay on Article 32 (a), (d) and (e) of Fiscal Responsibility Act, citing that Maldives now faced a natural disaster as defined under Article 36 (a) of Fiscal Responsibility Act.

THE FISCAL LIMITS SET UNDER ARTICLE 32:

Article 32 (a) establishes that the State may only borrow from the central bank Maldives Monetary Authority (MMA) if the repayment is made within 91 days, and that such borrowing must be limited to no more than one percent of the average State income, based on income for the past three years.

A stay on the clause will allow the government to delay repayment on borrowings from the central bank indefinitely, and possibly also allow the government to forgo the limit on the amount it may take out as borrowings.

Meanwhile, Article 32 (d) establishes that the State may only take out borrowings to fund national development projects and/or procure resources to boost productivity. It also establishes that the State may not take out borrowings for debt repayment, effective January 1, 2016.

Article 32 (e) establishes that the State may take out borrowings from the central bank to manage its cash flow with the stipulation that the repayment be done within 14 days.

The Finance Minister said in his letter that compliance with the fiscal limits set under Article 32 of Fiscal Responsibility Act was economically impossible in light of the financial and economic impact of the COVID-19 pandemic.

“If we attempt to comply with the aforementioned fiscal limits, there is great danger of multiple challenges in managing the State’s cash flow and the running of the State,” said the Finance Minister.