Tuesday, November 9, 2010

Are Most Parliamentarians fit to be in the Parliament?

Its been more than a week since a proper work has been done in the Parliament session. The Parliamentarians continue to draw Rf62,000 per month out of the State budget, do not care about the critical economic situation of the country, do not adequately address the growing social problems and crimes, and as the Human Rights Commission has recently highlighted, the Parliamentarians have neglected the rights of all Maldivians by not being engaged in making important laws needed for the country. And yet, nobody seems to be doing anything about this. The Constitution says that the "all powers of the State of Maldives are derived from, and remain with the citizens". Hence, even the Parliament and the Parliamentarians derive their powers from the people; and does that power still remain with the people? Is it the people's will, to halt the Majlis sessions, their representatives shout at each other, and delay passage of important laws? Is it the people's will, the Parliament do nothing to mend the economic, monetary, financial, social, and judicial problems in the country?

Well, I dont think most of the citizens in the respective constituencies have the power or influence over their member. If they don't, I'm sure its time, we start exercising that power, and pressure our Parliament members to act in good faith, to show sincerity towards the country's well-being. And also, to show respect towards each other, maintain discipline in the Majlis chamber and elsewhere.

One of the flaws in the Constitution is that it assumes that the members of the Parliament will act in good faith, and make all decisions for the benefit of the society and the country. But the problem is, its a very dangerous and a wrong assumption. Some Parliamentarians understand very well, the dangers of having a huge fiscal deficit, and its impact on the macroeconomy. However, even this year, we saw a State Budget that was passed with so many amendments leading to further increases in the expenditure and the deficit. Some educated Parliamentarians understand the importance of increasing government revenue through taxation, however, not enough effort has been put to pass the necessary legislation.

And some Parliamentarians, simply do not understand at all. The consequences of their actions, their words, and their inactivity. Some of them do not fully understand their responsibilities, and their duties towards the people and the country. Some of them do not have the values and principles that are necessary and prerequisites to become a Parliamentarian. We can fix the country and the economy very easily, if we have a sincere, honest, and respectable bunch of Parliamentarians.

Monday, November 8, 2010

...And who really can??

We got a new Constitution. And yea, we've got separation of powers, with an independent Judiciary, a Parliament, and an Executive. With it comes huge expenditure and lots of jobs with big salaries. With it, huge Government expenditure. By 'Government', I mean the total expenditure of all the state entities, including the Parliament, Judiciary, Civil servants, Political appointees, independent commissions, and all entities with budgets provided by the Ministry of Finance.

The Annual Budget is prepared and presented to the Parliament by the Minister of Finance. The Minister can work very hard, and try to reduce the recurrent expenditure (except salaries) of all the government ministries, like the education, health, president's office, police, army, and all of them. When it comes to the salaries of all the civil servants in these government ministries, only the Civil Service Commission has the power to decide on them. The Minister of Finance can advise the President to reduce the salaries of the political appointees, and also to reduce the number of political appointees.

When it comes to the independent commissions like the Human Rights or the Anti-Corruption Commission, they can decide on the level of salaries they will provide to its employees, except their members. The members' salaries are decided by the Parliament. So, here we have newly formed independent institutions with separate budgets, and the autonomy to hire and fire people as they wish. But ultimately, all their expenses and salaries are paid out from the Government budget, and the Minister of Finance is responsible for the macroeconomic stability of the country through its fiscal policy. For that reason, in most countries, the Finance Minister is considered as the most powerful and influential minister in the cabinet. In the case of New Zealand, the Minister of Finance may veto any parliamentary bill which would have a significant impact on the government's budget plans. In the USA, it is the Finance minister (Treasury Secretary) who even signs on the Dollar notes. In England, the Governor of the central bank (Bank of England) has to report to the Finance Minister (Chancellor of Exchequer). In many countries, this is the case.

It used to be the case even in our country. In the very beginning, the President himself was the finance minister as well as the governor of MMA. Later on, we had a cabinet minister as the Finance minister, and he was also the Governor of MMA. This way, the fiscal and monetary policies were synchronized, and things were in order for some time. In 2008, with the Constitution was adopted, new institutions and commissions established, and salaries were raised. The expenditure of the government hiked, and the deficit of the government started escalating. Meanwhile, despite MMA being independent, deficit of the government was heavily financed by MMA through printing Rufiyaa (monetization). This put pressure on the exchange rate. The process continued until the August of 2009, when deficit monetization was halted by MMA. However, the process of increasing the government expenditure did not stop, and the total wage bill kept on increasing. We had a budget deficit of 29 percent of GDP by the end of 2009, and we expect it to be around 20 percent by the end of this year.

Where are we now? Nobody is in total control of the affairs of the economy. Not even the President nor the Finance Minister or the Governor of MMA, has the power to rectify the economy, and put the house in order. We need to reduce the deficit of the government, by reducing the wage bill, and recurrent expenditure. We need to reduce the number of civil servants, develop the private sector, and increase our reserves.

So, in order to do these, the Parliament members need to understand all this, and act sincerely and in good faith. They need to pass necessary legislature that can enable somebody to reduce the wage bill and the reduce the deficit and the debt of the country.

Saturday, November 6, 2010

Can the finance minister save our economy?

I don’t think so. Here’s why.

The new Constitution requires us to form so many ‘independent’ commissions and institutions, and an ‘independent’ civil service. The Minister of Finance no longer has the power to control their salaries and expenses. The salaries of the Parliamentarians are decided by themselves. The salaries of Judges and the Judiciary are decided by the Parliament. The salaries of most independent commissions and institutions are decided by themselves, and the salaries of the commission members and the heads are nominated by the Parliament. Any new revenue measure has to be first approved and passed by the Parliament. The annual government budget is obviously passed by the Parliament. Most of the time, the Parliament passes the budget with many amendments that increase the expenditure further.

What is the role of the Finance Minister then? Just pay all the salaries, and budgets, and then record all the numbers? It’s pretty obvious that the Finance Minister cannot save our economy. So who can?