By Ali Assad
What every Maldivian household relies
on is the subsidised essentials of “Kaadu” - flour, rice & sugar.
Without doubt the sudden removal of
subsidies from the above goods has raised eyebrows within the government and
created opportunities for opposition to rally against the government.
The big question is “Is removing
subsidies a good policy or a bad move?”
Politically it is suicidal for the
government, especially at a time when local counsel campaign is looming ahead.
Enforcing an unpopular but essential policy for betterment of the whole nation
and its future, is the job of a leader but not what every leader does because
it might mean placing your political career at risk. So what’s the catch?
Let’s dive deeper and look into the
reality more closely.
Maldives started in the ranks of the
20 poorest countries and since then, we have been receiving subsidies and other
special grants from friendly wealthy countries and organizations. Malnourished
children with bloated stomachs and protruding belly buttons, especially in the
local islands, is a faint memory that few will remember.
We have jumped the hurdle of
underdeveloped countries and passed the benchmark line of progress to become a
developing nation.
Is this a time to beg for a meal or
proudly stand up on our feet?
It is almost ironically funny that we
should be subsidizing food when you look at the line of Maldivians queueing to
purchase iPhone 7.
Definitely, we cannot be feeding
subsidised food to a huge population of expatriate workers, foreign businessman
and tourists. Should we give targeted subsidies to roughly about 15000
Maldivians living below the poverty line, as per UNDP and our statistics or
share it equally - even with the resort owner? As you will agree, it is not
only absurd to give handouts to the rich but also ridiculous to divide handouts
equally with the rich and the poor.
The ideal and best solution is
managing our livelihood without subsidies. So is this the right time to cut
subsidies? Should we cut subsidies slowly in phases during a targeted time
period to minimize any shock to the economy and reduce any indirect
difficulties to the people? Government has partly reduced the subsidised amount
but is it too much and too soon?
Tough questions. Making subsidies
available to the poor is solving the easy part of the puzzle.
The difficulty is what will be the
larger impact on the economy and the domino effects of such a policy.
Undoubtedly, cost of most food
products will increase leading to a price hike. Will this be a temporary
inflation? Will the increase in prices reduce our purchasing power ultimately
causing a stable reduction in the inflation percent? Will the reduction in
purchasing power have a healthy impact in decreasing dollar shortage?
Whatever the outcome, cutting
subsidies is definitely something highly recommended by the experts in the
International Monetary Fund.
Maldives should not become another
Greece, where the heavy dependence on handouts and subsidies was the main
reason for the countries economical downfall. Not to mention similar problems
faced by Italy and France.
For critics of this policy, my
question is what is worse, cutting subsidies or the boycott and smear campaigns
against Maldives by the opposition? That is not including the call for
sanctions and oppositions’ push to place country in CMAG’s agenda through their
powerful contacts in UK Conservative Party and other such wealthy contacts like
Richard Branson, founder of Virgin Group, who is dedicated to the oppositions’
cause.
Money earned by the government should
be well spent on future generations. We can’t always afford to live with the mind
set of ‘business as usual’. The government’s current spending on capital or Public
Sector Investment Projects (PSIP) have doubled to 40% of the budget. Also number
of local islands having access to clean water, proper sanitation facilities and
renewable energy have more than doubled. The number one problem faced by
Maldivians is housing and the housing projects announced and underway are more
than all the previous government’s housing projects put together.
So is the deck of stories of unchecked
inflation, food shortages, country getting bankrupt and other unrealistic
fiction just an exaggerated facade of lies built up by the opposition that in
reality will fall and blow away like a house of cards?
