Finance Ministry to reinstate salaries slashed over pandemic

Finance Ministry to reinstate salaries slashed over pandemic

Ministry of Finance, on Tuesday, decided to reinstate the salaries that were reduced for a three-month period to tackle the economic repercussions caused by the ongoing COVID-19 pandemic.

In an attempt to reduce the state's expenditure, the incumbent administration cut off 20 percent from the salaries of political appointees at the level of deputy ministers of higher.

Moreover, the state also slashed between 20 to 30 percent off the salaries of employees earning over MVR 20,000.

These salary reductions were approved by the parliament for a period of three months.

Since this duration has passed, an official from the finance ministry told local media Mihaaru that, all of the aforementioned individuals' salaries will be reinstated from August onwards.

"During this period we were able to save MVR 12 million from salaries", they said.

Finance ministry released a circular, ordering institutions to stop implementing the two circulars previously publicised by the ministry, in addition to announcing that the state has adopted new measures for cutting costs in the future.

The new measures prohibit state institutions from hiring new staff without the finance ministry's permission, granting additional allowances, and adjusting working hours around overtime pay and orders offices to close at 1430hrs.

Moreover, the measures also order state institutions to halt all work-related international travel excluding mandatory trips permitted by the finance ministry, stop all capital expenditure other than the PSIP spending, and prevent conducting any maintenance work, unless already approved by the President's Office or the ministry.

In April, the World Bank estimated that Maldives will be the worst-hit country in the South Asian region, in the ensuing economic regression caused by the pandemic. The island nation was listed as one of the three countries that will see negative growth in the region, with GDP output estimated to contract by as much as 13 percent.

Meanwhile, the Ministry of Finance projected that the state deficit would reach MVR 13 billion this year compared to the MVR 5.9 billion originally stated in the 2020 State Budget, as a result of economic repercussions caused by the COVID-19 pandemic.

The ministry also projected that the total state debt sans guarantee would increase to MVR 70 billion, which accounts for 86.6 percent of Gross Domestic Product (GDP). An overall 115 percent drop is projected in the GDP, along with 81.3 percent for nominal GDP.