With the gradual receding of the pandemic, Maldives in now focusing on pertinent issues such as climate change, economy, and tourism
With the nation receiving the 1,000,000th tourist of the year—and the 100,000th in October—in the midst of the receding global pandemic, international rating agency, Fitch, has upgraded Maldives’ long-term currency defaulter ranking to ‘B-’ from ‘ccc’. The further good news is that the annual tourist season is just commencing and will go on till April, which means that the nation’s tourism-centric economy may take the road to slow but steady recovery soon enough.
Fitch attributed the upgrade to the speedier economic recovery than forecast. Tourist arrivals have rebounded sharply to around 70 percent of pre-pandemic levels with the number of bed nights recovering even faster as tourists, on an average, tend to stay around three days longer than before. The agency, however, cautioned against an anticipated outbreak of a third wave of COVID-19 and also heavy competition from other global tourist destinations, which are also on a recovery mode.
In a tweet, Finance Minister Ibrahim Ameer welcomed the Fitch rating and claimed that the government had managed to take care of short-term liquidity risk through a pro-market approach. He said that debt-to-GDP ratio is expected to improve as the economy grows, and added that the government is focused on diversifying the economy by investing in infrastructure projects that contribute to higher economic growth, even while increasing bed capacity and the like in the tourism sector. Minister Ameer also said that fiscal deficit is expected to gradually narrow down with consolidation measures, noting that the current focus is on growth rather than painful austerity measures that may prolong the economic crisis.
Finance Minister Ibrahim Ameer welcomed the Fitch rating and claimed that the government had managed to take care of short-term liquidity risk through a pro-market approach.
Minister Ameer also sent out a strong message for future generations by making higher allocations for education and healthcare, a very sensitive issue in the nation, particularly in the long run-up to the presidential polls of October 2023. Presenting an MVR 36.9-billion Budget-2022 to the Parliament, he allocated a total of MVR 4.49 billion to education and MVR 4.6 billion to health. Rightfully, economic development gets MVR 8 billion and the transport sector gets MVR 2.4 billion. Another MVR 1 billion goes towards environment protection and MVR 800 million to housing, which is as much an electorally critical sector as it is socially important.
With revenue receipts projected at MVR 24.2 billion for the new fiscal commencing on 1 January, the Budget provides for a deficit of MVR 9.7 billion, or 11.1 percent of the GDP. The Budget predicts a 12 percent growth in the economy in 2022. Against this, Fitch has forecast a 29.4 percent rise in the GDP in 2021, and has put the projection at a further 10 percent in 2022.
The budget allocations become significant when read with the findings of the National Bureau of Statistics (NBS) that 56 percent of the youth are unemployed and are also not in the education system. A total of only 89,956 youth are currently employed and 12 percent have achieved higher education, while 77 have achieved secondary education. The government has stated it is working with relevant institutions to provide more educational and employment opportunities to young people.
The statistics put the youth figure at 45 percent of the national population, up by two percent over the previous year, or 257,215. Of this, a disproportionately high 188,092 are males. 41 percent of young women and 15 percent of young men are currently not working or not in the education system. The NBS concluded that the high number of unemployed women owed to their family commitments.
The budget allocations become significant when read with the findings of the National Bureau of Statistics (NBS) that 56 percent of the youth are unemployed and are also not in the education system.
As elsewhere, youth unemployment, especially, has serious social consequences, more so in the Maldives. In a nation with the highest rate of divorces in South Asia, and consequently, broken homes, space scarcity in match-box size houses drive youth, both male and female, to the streets. In the capital Malé, the city with the highest density of population in the region, homeless youth are driven to the waiting arms of street-gangs, who offer a ‘group identity’. The youth take to drug-addition and smuggling, mainly for international operators. Successive governments have tried to tackle the issue but without much success.
Overseas, President Ibrahim Solih gave expression to the economic diversification project. Delivering the keynote address at the Maldives Investment Forum at the Dubai Expo-2020, the Maldivians had always relied on the sea for their livelihood and sustenance, and, therefore, the ‘Blue Economy’ is a key component of the government’s economic policy.
In this regard, Solih said that the country was now open for business post-pandemic and was ready to welcome investors. Promoting an enabling environment entailed removing unnecessary bureaucratic red-tape with streamlined procedures, increasing access to finance and ensuring greater responsiveness, transparency, immutability, and security for investors, he stated.
At Dubai, President Solih also highlighted climate change issues, which was taken up at a different level by his Foreign Minister Abdulla Shahid, elsewhere. Addressing the 26th UN Climate Change Conference (COP26) as the President of the UN General Assembly (UNGA) at Glasgow, Scotland, Shahid said that nations have failed to take adequate action to combat climate change despite having the capacity and resources. “We have run out of excuses. It is time to do the right thing,” he added.
At Glasgow, President Solih reiterated the continuing national concern that “Maldives will cease to exist by the end of the century if climate-change worsens”. He said in this regard: “If the rise in temperature remains unchecked at 1.5 and jumps to 2 degrees, that is a death sentence to the Maldives… We are determined to be part of global solutions to reverse these trends, to change the status quo.”
President Solih reiterated the continuing national concern that “Maldives will cease to exist by the end of the century if climate-change worsens”.
Both Solih and Nasheed participated in the Glasgow conference. Of the two, Nasheed is better known across the world as a ‘climate warrior’ as he is (also) a ‘democracy warrior’ nearer home. To highlight the plight of small island nations like Maldives when President, he held an under-water Cabinet meeting, ahead of the Copenhagen Climate Summit of2009.
With economy, tourism and climate change thus becoming major media attractions after long months of the pandemic, politics has taken a backseat in the eyes of the public. It also owes to fissures within the ruling Maldivian Democratic Party (MDP) occupying the centre space even at the height of the pandemic. As coincidence would have it, even as the pandemic eased, so did the MDP tensions, especially after Speaker Nasheed returned home in the midst of follow-up treatment for the 6 May blast injuries suffered in Malé.
Nasheed met with President Solih at the Presidential Palace, and Gasim Ibrahim, Leader of the Jumhooree Party (JP), ally of the MDP, at the latter’s Maamigili constituency. He also reportedly met with the leadership of the newly-founded Maldives National Party (MNP) of former Defence Minister, Col Mohamed Nazim (retd). For his part, Solih, while in Dubai, met former President, Maumoon Abdul Gayoom, founder of the MRM ally of the MDP.
In their discussions with the alliance leaders and others, Solih and Nasheed are believed to have discussed the latter’s demand for transitioning from the present presidential system to a parliamentary form of governance. The meetings become significant after Nasheed said that Solih favoured transition. He reiterated that it would be more beneficial if all parties worked together on the change. That included the political Opposition, but the success of the project depends even more on the MDP’s allies.
With economy, tourism and climate change thus becoming major media attractions after long months of the pandemic, politics has taken a backseat in the eyes of the public.
Independent of his political meeting while in the country, Speaker Nasheed received Chinese Ambassador Wang Lixin for an official in-person meeting, after their online exchanges in September. The meetings assume significance as Nasheed’s opposition to China in Maldives’ development projects is total.
For now, parties to the political discussions within the ruling alliance are maintaining silence, thus keeping the temperatures down. At the same time, a possible patch-up in the MDP has dampened enthusiasm in the Opposition PPM-PNC camp.
The on-again-off-again ‘India Out campaign’, this time over the UTF island-based construction for Maldivian maritime forces, too, may not be enough to set off negative fallouts, if any, from the anticipated Supreme Court verdict in former President Abdulla Yameen’s appeal against lower courts ordering him to a five-year prison sentence and US$ 10 million in fines. With that hangs Yameen’s electoral fate, to be able to contest the presidential polls.
After Parliament’s Committee on National Security (241 Committee) had cleared the UTF agreement after all members had read iy in confidence, the PPM participants have come up with a belated statement, calling it ‘unconstitutional’ and wanting it ‘terminated’. The PPM celebrated its tenth anniversary without Yameen, and took out an ‘Independence March’ to defend the nation’s sovereignty.
MNP parliamentary group leader and former National Police Chief, Abdulla Riyaz, for his part, has indicated that the number of party MPs would go up from the present three, implying crossovers.
They claimed that Yameen’s imprisonment has only increased the party’s membership— 37,093 against MDP’s 53,139. This is the case, even as the newly-registered Maldives National Party (MNP), with founder Nazim promising to revive the ‘national ideology’ and to combat the continuing black market in US dollars. MNP parliamentary group leader and former National Police Chief, Abdulla Riyaz, for his part, has indicated that the number of party MPs would go up from the present three, implying crossovers.
For its part, the Indian neighbour continued with its bilateral cooperation efforts, with yet another agreement to assist in capacity building for good governance, this time focusing on upgrading accounting and audit procedures. In a significant first step, the Comptroller and Auditor- General of India (CAG), Girish Chandra Murmu, in a none-too-frequent overseas visit, was on hand to sign the bilateral agreement in this regard.
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N. Sathiya Moorthy is a policy analyst and commentator based in Chennai.
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