An inflated sovereign debt to China and corruption scandals involving state-owned enterprises (SOEs) plague a nation searching for stability and growth. A flush of transparency policies and fiscal reforms have been launched by the Solih government and the ministry of finance, but will it be enough?
What actions are you taking to fight corruption?
During the previous administration, projects were allocated in secrecy, with no open bidding process and we witnessed large corruption scandals. Reducing corruption is among our primary pledges, and the first thing our government did was to establish new transparency measures. The finance ministry has already started publishing data related to fiscal affairs, debt statistics, loan portfolios, etc. All ministers and political appointees were asked to do an asset declaration form. Furthermore, when we look at the current state of affairs, we see that 90 percent of the corruption in the country goes through SOEs. So, we are reviewing their procurement and management policies and pushing for reform, accountability and fiduciary responsibilities from the management structure, under a “zero tolerance on corruption” campaign launched by President Solih. All SOE’s board directors will be required to publicly declare their assets. This is fundamental, as the corruption that takes place in small government institutions is minimal compared to what goes on in big SOEs. Another important measure we have introduced is whistleblower protection. The launch of a whistleblower website will ensure that those who want to stop corruption will be protected, thus encouraging them to come forward with information on such occurrences. We don’t want that to witness cases similar to the Maldives Marketing and Public Relations Corporation scandal, which only came to light after an employee took a risk and ended up in jail for it.
What are the biggest economic challenges for your country?
The biggest challenge is the dispersed geography of the Maldives, which we are seeking to overcome through decentralization and giving power to the islands, atolls, and city councils. Another issue is the small size of the economy. Our high dependence on imports makes us substantially exposed to external shocks. We want to create conditions to mitigate our dependency on foreign products by investing in our agricultural sector and making the nation more self-sustained. We are increasing the technical capacity of farmers and we plan to create a public agriculture company responsible for purchasing agricultural produce from local communities and channeling it to consumer centers like the tourism resorts.
What measures are being taken to tackle the sovereign debt issue?
The problematic debt situation is constraining our fiscal space. The sovereign guarantees given by previous administrations represent a considerable burden, but most projects financed through these mechanisms are already underway and cannot be reversed. We intend to speak with our foreign partners, particularly the Chinese government, with regards to restructuring our debt and reducing its weight on the economy. Furthermore, we are introducing tax reforms, consumer and investor protection laws, and we are improving the business environment, while looking for alternative solutions. We have secured $1.4 billion in assistance from the Indian government for budget support, currency swap agreements and credits. The $800 million credit through the Indian EXIM Bank will fund feasible projects at very low interest rates, so we can continue to invest in fisheries, agriculture and tourism and sustain an expansionary fiscal policy.
What is being done for SMEs?
In order to support the growth of small and medium sized businesses, we have created the SME bank that will issue loans for start-ups, entrepreneurs and small businesses. This will diversify our economy beyond fisheries and tourism, providing opportunities to our well educated youth to explore businesses in new areas, leading to job creation and enhanced business engagement.