A new fiscal responsibility bill has been proposed to the Parliament to raise the amount of funds the government could borrow from the central bank Maldives Monetary Authority (MMA) under the fiscal responsibility law currently in force.
The bill titled State Fiscal Responsibility Law was submitted to the People's Majlis on behalf of the government by Thulusdhoo MP Ibrahim Naseem.
Repealing the existing law, introducing a new system with fiscal rules that can be properly enforced, and specifying objectives and principles in a manner that would ensure that all of the state’s finances are sustainable, transparent and responsible were stated as the purposes of the bill.
The most notable provision in the bill specifies rules for borrowing or seeking funds as advances from the central bank. The bill proposes raising the government’s borrowing limit from the MMA from one percent of the state’s average income over three years to 2.5 percent.
titledesc
If the bill is passed into law and enacted, the government will be able to borrow MVR 694 million instead of about MVR 277 million at present. This is an increase of about 150 percent.
Other important provisions in the proposed state fiscal responsibility law include formulating a fiscal responsibility charter within six months of the start of every presidential term.
The fiscal charter to be formulated and made public by the Finance Minister in office at the time must be reviewed in light of serious economic shocks facing the country. The Parliament and cabinet will also be legally obliged to abide by the charter in making decisions that affect state finances.
The first reading of the bill took place yesterday ahead of a preliminary debate.
The government’s effort to raise the borrowing limit from the MMA comes after accusing the previous government of causing an economic crisis by printing money after suspending the provision on the limit for advances from the central bank.
