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Editorial

How much does Gayyoom cost us?

More than US$71.5 million over the past six years

by A.S.I.Moosa (Sappe') , 17 October 2004 (first publication) - Updated 9th July 2006

Presidential Palace - Theemuge Male'

President's Office - Male'

Presidential Retreat Island - Aarah

Presidential Yacht -MV Arumaazu

Over 50% of the population of Capital Island - Male' live in congested conditions in run down houses; most households earn extra income by renting rooms to expatriates and Maldivians from other islands.

The destitute in the capital island Male' beg for money and food in the Local Market just behind the multi-million dollar Palace of their President

Maldives Tourism sector has been developed while other sectors such as Fisheries and Shipping have been neglected.

The fishermen of Maldives are among the best in the world, with over 2,500 years of experience. Many economists believe that if the government had invested in Fisheries as they did in Tourism, this sector would now contribute much more to the economy.

Maldives has recently been promoted to a Developing Country* from the Least Developed Countries category. However, the living standard of the Maldivian people does not reflect that rise. (It has since been deferred).

The only indication that the economic well-being of the country has improved is the criminal misappropriation of state funds sustaining President Gayyoom's lavish life style.

For example, in 2003 the total revenue and grants published by Maldives Monetary Authority was US$238 million, of which $14 million was Presidential expenses. For his palace, yachts, exclusive hideaway islands such as Aarah, his massive office complex and his huge staffs' salaries... etc.

This, in a country where 42% of the population still live below the poverty line, a country where the average salary is less than US$ 200 per month while the costs of food and basic living requirements are among the highest in the world.

This, in a country where adequate health services are not provided to the population, and secondary education is often not available either. In Maldives less than 300,000 people depend heavily on income generated from the tourism sector which contributes 33% to the GDP.

Fisheries and other important industrial sectors do not get the kind of government attention given to the tourism sector, which makes life harder for people in the islands where the majority of Maldivians live. Life for most Maldivians has no resemblance to the luxury and wastefulness of President Gayyoom and his family.

Gayyoom runs the country as his private property and uses the parliament (Majlis) as a rubber stamp. For 27 years, the people of Maldives have been brainwashed to believe that Gayyoom's luxurious palace and office are the main symbols of the nation's development.

The following data, obtained from government sources, shows his expenditure has averaged nearly US$12 million a year over the preceding 6 years. The estimate for 2004 was US$14 million. This is why public services such as Health and Education are under-financed in Maldives.

School teachers in Maldives teach their students in rundown schools, under-funded and under-resourced, and tell their classes that the Palace is a symbol of prosperity and progress. That is Gayyoom's propaganda.

Gayyoom's budgeted expenses were at least 44% and 55% respectively for the National Education and Health budgets for 2004. What on earth is going on in this tiniest of nations? No wonder Gayyoom wants to remain in power and keep abusing his people. He wants to remain one of the wealthiest leaders in South Asia. He is the richest man in the Maldives because he has the whole wealth of the nation at his disposal and no one dared to question him (until now), fearing repercussions which could affect their jobs, livelihood and families, bringing years of solitary confinement or even a life sentence in jail. Many Maldivians know what happened to Mr. Arif Hilmy, former State Minister of Finance, who would not provide funds for Gayyoom to buy an executive jet costing US$25 million. He was forced to resign and has not been given another appointment in the government despite several promises by President Gayyoom.

It is worth noting that by getting rid of this waste, (i.e., by getting rid of Gayyoom) even the business community stands to gain substantially. For example, compare his budgeted expenses to tourism tax and import duty as shown in Table III below. The profit from the business sector is also being compromised and fed into financing the regime. By removing him from power, the business community and the Maldives treasury stand to gain a great deal of revenue and the livelihood of our people will improve greatly as well.

More importantly, we Maldivians must be careful about our finances too. The debt of Maldives is US$280.9 million (Source :Financial Review 2003 Maldives - see External Debt Below). As a nation we must try to control this debt, as it has grown substantially from year to year, 18% in 2003 alone. The more we owe to foreign banks, especially for Gayyoom's wasteful practices, the less power we have over the destiny and government of our country. (Update: Total debt is estimated to be more that US$ 500,000 now since the tsunami.)

There is no way to justify Gayyoom's personal expenditure in a small underdeveloped nation like ours. The GDP of the Maldives for the last three years was US$511 million (2001) US$544 million (2002) and US$590 million (2003), which means that Gayyoom costs nearly 2.3% of the GDP of Maldives.

External Debt

'Statistics on external debt comprises of medium to long-term government and government guaranteed borrowings plus short-term borrowings of the banking sector. Total external debt stock (disbursed and outstanding) has remained at around 40 percent of GDP in both 2002 and 2003. In absolute levels this amounted to US$259.0 million in 2002 and had increased by 8 percent to US$280.9 million at the end of 2003. Of this total, 94 percent was medium- and long-term debt and it increased by 18 percent in 2003. Multilateral and bilateral highly concessional debt constituting 70 percent of the medium to long-term external debt portfolio grew by 12 percent on annual terms in 2003. The remaining 30 percent comprised of suppliers' credits (which sometimes include a grant element within the package) and commercial loans, and such debt increased significantly (by 37 percent) during the year 2003. Short-term debt, which reflects the foreign liabilities of commercial banks, comprised 6 percent of the external debt stock and registered a sharp decline of 54 percent at the end of 2003.

During 2003, disbursements of medium and long-term loans stood at US$51.1 million, while amortisation was recorded at US$17.4 million, and interest payments amounted to US$4.6 million. Total debt service therefore totalled US$22.0 million, which was equivalent of around 4 percent of Maldives' exports of goods and non-factor services.

The tourism sector accounted for 33 percent of GDP and 31 percent of domestic revenue in 2003. In addition, foreign exchange earnings from tourism accounted for over 90 percent of the services receipts of the balance of payments. The value added to GDP by the tourism sector grew by a substantial 15 percent in 2003 compared to a 3 percent growth in 2002.' [Source :Financial Review 2003 Maldives]

Fisheries Sector is neglected to keep the people poor

Until recently, purchase, processing and export of tuna in the Maldives including canning factories were owned and monopolised by the government. In major fishing islands such as G Dh. Thinadhoo, 80% of the time the catch cannot be sold to the Government company Maldives Industrial Fisheries Company (MIFCO). Some of the highest wastages were recorded in 1998 when out of an average catch of 10,000 kgs MIFCO only bought 500 kgs. This meant that the unsold catch, 9500 kgs were thrown back into sea as waste because the fisherman could not process it, freeze or cook it.

In UK, the price of fresh chilled tuna is nearly US$23 per kg. The purchase price for a kilo of fresh tuna in Maldives is approximately US$0.20 (20 cents)!

Most Maldives tuna is exported at a cheap rate to Asia, especially Bangkok. It is believed that to export to the EU, Maldives will have to invest more in the industry to meet EU processing standards. Furthermore, it will expose the wealth of the fisheries industry to the wider world. When deals are done in cheaper markets, there are lots of commissions to be made. It has been reported that the chairman of MIFCO received over US$1 from each kilogram of tuna sold in Bangkok.

In 2001, Gayyoom privatised the fisheries sector by selling off investments in Maandhoo Fisheries Complex and also by providing export licenses to four different parties in over 50% of the Maldives fishing area. The country was divided from north to south into four zones. The most lucrative Zones, 2 and 4 still remain firmly under the control of Gayyoom and his associates, despite the private companies showing greater ability and more efficiency in the business and management of their licences.

The fisheries sector does not receive priority from the government. Maldivians are fully aware of the lack of investment opportunities and financing available to fishermen and industry leaders.

The following excerpt from the QUARTERLY ECONOMIC BULLETIN JUNE 2004 - www.mma.gov.mv/qeb/jun04.pdf (the document has since been removed but we have a copy ../docs/mar04.pdf ) explains why the country remains poor and why the tourism sector contributes to 33% of the GDP:

'In terms of the sectoral allocation of credit during the quarter, credit to the tourism sector accounted for the largest share of total credit to the private sector (58 percent). Such credit increased by Rf160.1 million, or by 11 percent during the three months to June 2004. This was compared with an increase of 14 percent during the previous quarter. Credit to the commerce sector holds the second largest share (19 percent) of the private sector credit portfolio. After a decline of 6 percent in the first quarter of 2004, such credit increased by 14 percent during the review quarter. As regards the annual movements in credit to both these sectors, the tourism sector showed a strong
growth of over 34 percent, whilst the commerce sector recorded a growth of 3 percent in the year to June 2004. Credit to the fisheries sector accounted for 7 percent of the private sector credit portfolio and recorded a quarterly increase of 6 percent during the three months to June 2004 compared to a 21 percent growth during the previous quarter.'

Table I

Expenditure		1998	1999	2000	2001	2002	2003	2004 budget
Presidents office		35,879,129.00	108,142,771.00	67,737,653.00	69,753,833.00	82,457,097.00	84,534,603.00	85,444,081.00
Presidential Palace		66,545,591.00	76,966,398.00	65,761,927.00	75,647,022.00	82,918,736.00	93,549,462.00	99,772,828.00
Presidents office (Special budget - unknown)		-	-	-	1,854,255.00	1,830,245.00	2,000,000.00
President Salary					900,000.00	900,000.00	900,000.00	900,000.00
Minister of Finance					200,400.00	200,400.00	200,400.00
Total in Mrf		102,424,720.00	185,109,169.00	133,499,580.00	148,355,510.00	168,306,478.00	181,184,465.00	186,116,909.00
Annual Total Expenditure in US$		7,970,795.33	14,405,382.80	10,389,072.37	11,545,175.88	13,097,780.39	14,099,958.37	14,483,806.15

Table II
Total over past 6 years	US$	71,508,165.14

2004 Education Budget	US$	32,968,833.93
2004 National Health Budget	US$	26,176,796.34
Gayyoom's Expenses
Compared to National Education Budget '04		44%
Compared to National Health Budget '04		55%

Tabel III
Public Finance		1999	2000	2001	2002	2003
Total revenue and grant		173,175,097.28	184,645,914.40	196,311,284.05	211,276,264.59	238,272,373.54
o.w. Tourism tax		21,478,599.22	21,525,291.83	22,778,210.12	23,750,972.76	27,774,319.07
o.w. Import duty		48,910,505.84	50,785,992.22	51,494,163.42	53,859,922.18	60,996,108.95
Expenditure and net lending		195,050,583.66	209,665,369.65	224,583,657.59	242,591,439.69	266,801,556.42
Overall deficit		- 21,875,486.38	- 25,019,455.25	- 28,272,373.54	- 31,315,175.10	- 28,529,182.88

Gayyoom's Expenses as a
Share of the Tourism Tax		67%	48%	51%	55%	51%
Share of the Import Duty		29%	20%	22%	24%	23%
Share of Revenue and Grant		8%	6%	6%	6%	6%

Maldivian Rufiyaa : US$ 1 = 12.75 Mrf - Source : Informants in Maldives Government and Maldives Monetary Authority