Need to introduce a balanced, sustainable mix of growth and austerity policies

May 10, 2012 - 02:53
  • Maldives Presidential Election second round vote counting on October 28, 2008. The next election is to be held in 2013. HAVEERU FILE PHOTO

By Dr Hassan Saeed What will our next elections in 2013 be about? Will it all be about February 7 and the events leading up to and following on from it? Some might argue that the majority in the Maldives have already made up their minds about this issue and are unlikely to change their view.

So what else will influence how people might vote?

In my view the cost of living and the impact of the global economy will increasingly take centre stage. This has certainly been the case in other countries. In Europe the debate is one of 'austerity' v 'growth', with this influencing the results in the recent French and Greek elections with ‘anti austerity’ parties winning the day.

Will this debate be an issue here? Yes it will. Voters will want to know how we will improve their standard of living in 2013 and beyond.

The day Nasheed took oath office I warned him of the impending world economic crisis. Unfortunately we did not take global recession seriously enough in 2008-2011. We just spent when the going was good and have not minimized debt and built up reserves. When other countries were being more cautious, our government policy of that period stored up problems for the future. Unpaid bills amounting to hundreds of millions of rufiyaa, billions of fast maturing treasury bonds, financially unsustainable welfare schemes, vast number of loss making state corporations, large number of fat salary paying political appointments are just a few examples. Perhaps there needs to be an independent review of how and why our spending was piling up the debt at a time other governments across the world were cutting back?

In much of Asia we see high levels of growth and in, for example, India and China vast investment in developing infrastructure. The Maldives could comfort themselves by thinking we are simply part of a growing 21st century Asia. But actually our economy - because of our reliance on tourism - depends in part on the success (or otherwise) of Europe in getting out of recession. 

We also have to provide a welcoming environment for continued investment particularly by our near neighbors and China. Those countries and their businesses who may indeed want to invest further in the Maldives, will want political stability and peace on the streets. They certainly would not want some parties to call for tourists to boycott our resorts. 

Further, a sensible approach to managing our finances is, as I argued in my article last week, essential to a successful government. But, we also need a debate as to where we prioritise the growth to maximise the improvement in people's standard of living. This will include sectors such as fishing and food processing, tourism, green energy and transportation-but where else? For example, we are geographically close to the expanding Indian software industry and perhaps we should be seeing how our IT savvy youth population can benefit further from that booming sector too?

As well as private investment, there will still need to be focused public investment in educating our children and providing health care for all our people. 

Foreign business and governments need to see all the political parties, particularly those represented in the Parliament, subscribing to a government spending regime that demonstrates its prudence with ours and investors’ monies.

If our economy is to prosper in the future, the government will need to introduce a balanced, sustainable mix of growth and austerity policies. Not all of these measures will be popular.

It would be damaging to our economy for opportunist politicians to take any undue advantage of this public unease. In short for the sake of our country political opportunism should give way to both political and economic prudence.

Note: Dr Hassan Saeed is currently the Special Advisor to President Dr Mohamed Waheed Hassan Manik

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