IMF provides recommendations for Fiscal Responsibility Act

International Monetary Fund (IMF) provided recommendations for Maldives' Fiscal Responsibility Act (FRA). 

The FRA came into effect in 2013, with the objective of reducing the increasing public debt and achieving fiscal stability. It also sets minimum standards for fiscal transparency and accountability and requires the government to prepare and publish medium-term fiscal and debt strategy reports.

In response to a request from the Ministry of Finance, the Fiscal Affairs Department conducted a capacity development mission. A Technical Assistance Report was released afterwards, with six key recommendations.

As per IMF, a wrap-up meeting addressing the key findings and recommendations was held with the Finance Minister Ibrahim Ameer, State Minister Ismail Ali Manik and other department heads of the ministry. 

Furthermore, IMF expressed gratitude towards the Maldivian authorities for their corporation during the course of the mission. 

Key Recommendations:

 • Objectives, Definitions and Coverage

 • Moving from a rules-based FRA to a principals-based law

 • Improving the reporting of the government’s fiscal intentions 

 • Ex-post reporting

 • Fiscal oversight institutions

 • Transitional Provisions

Under each key highlight, there were elaborative sub-part recommendations as well.

A few of these are providing proper definitions for all terms used in FRA in a single Article, to mandate the Minister of Finance to table a Fiscal Strategy Report before Parliament by mid-June, including a requirement in FRA for a Final Budget Outcome to accompany the submission of annual financial statements to the parliament that are consistent with the Public Finance Act.

Some of the other recommendations include:

 • Ensure consistency in the PFM legal reform agenda and consider the merits of adopting the FRA and the Public Debt Act in the same parliamentary session in 2021.

 • Consider the areas where changes are needed in the Public Finance Act and Financial Regulations and make appropriate draft amendment proposals for Parliament’s consideration.

• Remove all cash flow planning provisions (chapter 8) from the 2013 FRA and transfer the relevant provisions to the Public Finance Act or the financial regulations.

• Consider transferring Article 32(a) of the 2013 FRA—restrictions on advances to the government from the Maldives Monetary Authority (MMA)—to the Public Finance Act

IMF remotely conducted the capacity development mission from November 1 till November 30 in 2020. The mission was led by Ozlem Adyin (FAD Economist) and comprised Laura Doherty (FAD Senior Economist), Nabil Hamliri (FAD Technical Assistance Advisor), and Ian Lienert and José Miguel Ramos Carrasco (both FAD experts).