Business Times

Lessons from the Maldives

Fancy sharply pruning down the cost of the president’s office or any government ministry or department for that matter? Maybe we can learn some lessons from the Maldives, a tiny island state which is having a major voice in the global climate change debate.

The island nation of more than 1000 atolls has undertaken a stringent cost cutting exercise to rid the country of extravagant spending and channelling all this valuable money to social spending including a new social insurance scheme. This is happening under the new regime of Mohamed Nasheed who was elected President of the Maldives in November 2008, ending the 30-year reign of Mamoon Abdul Gayoom.

Young, vibrant, frank and honest, the young Nasheed has enforced some cuts which to most governments would be impossible. Consider this: The President’s Palace (residence) and its 300-strong staff previously cost the government 400 million rufiya (about $30.7 million) to run. The new President has cut it, virtually to the bone, and now the cost of running the residence is 27 million rufiya! How? He has moved to a smaller house and cut staff at the residence to 23.

The President’s office which cost 300 million has been brought down to 60 million. The new regime is working to a ‘We Can’ agenda. President Nasheed told two journalists in an interview this week that despite the severe cuts he is living comfortably. “I don’t need extravagance. For example when one launch could be used (to travel to an island), 10 launches have been used (in the past),” he said. All travel between the Maldives capital, Male and the 200-odd inhabited islands is by boat.

“The political staff were lavishly provided for,” he said, referring to Gayoom’s regime. The government has also enforced bold, and somewhat unfavourable, cuts in spending on the civil service with pay cuts for the civil service. The civil service in the Maldives, like in Sri Lanka, is bloated and filled with political cronies. Social welfare was essentially through providing public sector jobs to the people while health and education suffered, according to government officials. The small Gan airport in the Maldives employs some 300 workers when it could do with 20 to 30; just the kind of excessive workforce you find across the Sri Lankan public sector.

Another interesting development which is laudable in terms of transparency is that the Maldives President often declares publicly, expenses incurred in overseas trips. Just before Nasheed took off on a official visit to Australia last week, his Press Secretary Mohamed Zuhair announced in the local media that the Australian government will fund most of the costs associated with the trip (including the entourage), aside from airfares. Would the Sri Lankan President, ministers and government official make such a declaration when undertaking overseas trips?

Battling a huge budget deficit, over 30 % of GDP, a cost carried forward from a past era of extravagant spending, the Maldives government is facing an uphill task in funding new healthcare programmes and education development among others. And here’s where the government is bold enough to enforce cuts --- in its own backyard; the President’s own expenditure for example!

In the Sri Lankan context, extravagant spending is across the board, in running the presidency, the cabinet of ministers and sections of the public service. Sometime back the Treasury Secretary was firm with spending requests from Ministers so much so he was unpopular with some cabinet ministers, just because he was doing his job! However with some sections in the Treasury now seen as part of the political hierarchy, there is little or no effort to cut extravagant spending at the top.

Sri Lanka is entering a phase where billions of rupees will be spent on the new development phase after the war and this is where transparency and accountability is important. A better effort to streamline spending and regularly explain in detail spending measures particularly when undertaking foreign trips – like in the Maldives case – would help to ease public concern that this government, like many other governments, is on an extravagant spending spree.

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