THE MALDIVES HAS GREATLY IMPROVED ITS BUDGET

UNCLAS SECTION 01 OF 02 COLOMBO 000034 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: AID EAID ECON EFIN KMCA MV PREL SUBJECT: THE MALDIVES HAS GREATLY IMPROVED ITS BUDGET TRANSPARENCY REF: A. A) SECSTATE 1923 ¶B. B) 2009 COLOMBO 1021 ¶C. C) 2009 COLOMBO 1130 ¶1. (SBU) Summary. Maldivian President Nasheed has made improving budget transparency a goal for the Maldives. The Government of the Maldives (GOM) has taken action by adopting a public accounting system and using the IMF's Government Financial Statistics (GFS) budgetary format. The GOM has presented its detailed budget to Parliament and made the budget available to the public in the local language; we expect it will be available next week in English. The GOM has also provided detailed information to the Embassy and the IMF. Although the budget contains some very optimistic assumptions, it demonstrates GOM,s budgetary plans. The Maldives recently signed an IMF agreement, so Post expects public accounting systems and budget transparency to increase in the future. End Summary. GOM Increases Budget Transparency ¶2. (U) The Maldives is an emerging democracy which ended 30 years of authoritarian rule in 2008, with multi-party elections that resulted in former political prisoner Mohamed Nasheed becoming President. Ministry of Finance and Treasury officials told Charge that President Nasheed,s first visit to a Ministry was to the Ministry of Finance and Treasury, where he asked about the Ministry's financial accounting, and he directed them to start a central accounting system. After econoff delivered the 2009 budget transparency demarche (see reftel B),Minister of Finance and Treasury Ali Hashim assured econoff that the GOM was increasing its budget transparency. ¶3. (SBU) The GOM has substantially increased its budget transparency over the last year. The GOM provided its national budget in the local language of Dhivehi in November, and the Parliament debated and passed a budget in January. The GOM provides some budgetary tables on line in Dhivehi on the Ministry of Finance and Treasury website. The GOM is preparing an English version of its final budget, which is expected to be available next week. The GOM has also provided detailed budget information to the Embassy (for example, reftel C) and the International Monetary Fund (IMF). IMF Representative Dr. Koshy Mathai, who covers Sri Lanka and the Maldives, said that the GOM has given the IMF the detailed budgetary data needed for their analyses. Mathai also noted that the GOM has a public accounting system, and commented that their budget transparency was 'not bad' for a country of their size and resources. ¶4. (SBU) The GOM has made great strides in improving its public accounting systems. The GOM began implementing a public accounting system last year, and the Ministry of Finance and Treasury plans to present detailed accounting on budgets in key areas such as health and education in 2010. The Maldives started formulating its budget according to the IMF Government Financial Statistics (GFS) format in 2009. The revised 2009 budget, presented by the Nasheed Government, was the first to be published in the GFS format. The 2010 budget presented to Parliament in November 2009 was the second GFS-formatted budget. IMF Will Further Increase GOM Budget Transparency ¶5. (U) The GOM has agreed to a three year IMF stand by program, which will further increase their budget transparency. IMF Representative Mathai has visited the Maldives twice in the last month, and an IMF team will travel to the Maldives to conduct a review in February 2010 to determine if the GOM is on track with its IMF targets. The IMF program has tough targets for the Maldives to reduce its budget deficit, so we expect the IMF teams to demand current and comprehensive information. The Maldives Meets Fiscal Transparency Test ¶6. (SBU) Post has found that the Maldives budgets accurately reflect GOM plans, although they are quite optimistic and typically overestimate expected revenue. For COLOMBO 00000034 002 OF 002 example, in 2009 the GOM assumed that they would receive substantial income from privatization of state assets, but they could not find buyers, so this increased their already large budget deficit. Econoff and the IMF have found Ministry of Finance and Treasury officials to be very open with budget information and their budget plans. ¶7. (SBU) Comment. The GOM understands that fiscal transparency promotes reduced corruption and better resource management, and they have made a number of concrete steps to improve their budget transparency. The GOM is providing budget information on its public website, and they have been responsive to Embassy requests for information. Therefore, Post recommends that the Department find that the Maldives is meeting the requirements of fiscal transparency. End Comment. BUTENIS