However, the government of the Maldives contested this recommendation on the basis that the country is vulnerable to external shocks, both economic and environmental. The underlying purpose of this argument was that the decision of the General Assembly would lead to a change in the amount and terms of development assistance available to the country in the form of grants and loans.
After having considered reports submitted by the government of the Maldives, the Donor Roundtable Meeting unanimously decided in May 1999 that the Maldives should retain its Least Developed Country status because of the vulnerability of the economy and the need for continued assistance.
It is generally accepted that the purpose of international
aid and assistance programmes is to promote poverty-reduction and to assist
in the sustainable development of the least developed and developing countries
which would enable them to meet economic and social needs.
The donor countries are often countries of the Organisation for Economic Co-operation
and Development (OECD). Japan, Asian Development Bank (ADB), United Nations
agencies, and the International Monetary Fund (IMF) are the principal donors.
The United Kingdom, Australia and New Zealand also provide significant amounts
of assistance thorough their taxpayer-funded aid programmes such as the New
Zealand Official Development Assistance programme (NZODA) and Australian Aid
(AusAid).
In light of recent and ongoing occurrences in the Maldives, there is a growing concern as to whether or not Maldives misuses international aid and assistance programmes. This article raises three fundamental points, i.e.:
It should be noted that it is difficult to address some of these concerns due to lack of quantifiable material evidence as there are no official documents reporting government expenditure, and freedom of expression is controlled in the Maldives, and newspapers are, directly or indirectly, controlled by the government. However, in these circumstances oral evidence may be enough to substantiate any claims in respect of these concerns. The figures in relation to the country's economic growth, international aid, and foreign debts are evidenced by reports from international organisations such as OECD, ADB, and IMF.
Misuse of RevenueAccording to World Development Indicators (WDI) 2000 the Maldives economy has been much better than some other countries in the region. Whilst its economy is heavily dependent on imports, industries such as fishing, tourism, and import duties generate revenue for the country. In the financial year 1999-00, GDP was US$310 million whereas the population remained at only 250,000 people. During the last three years the economy grew in real terms between 8% and 9% and the inflation rate remained as low as 4% to 6%.
While there is steady growth in the Maldives economy the
economic wealth does not seem to reach the ordinary members of the general public.
The following examples suggest that the government of the Maldives has been
negligent in allowing senior government officials misappropriate government
funds. For instance, as understood by the general public, a senior government
minister misappropriated approximately $US200 million of government funds in
the early 1990s. Likewise, Air Maldives, a government funded airline, is said
to have lost more than US$9 million and the company had to be liquidated eventually,
while the whole saga remained confidential.
According to sources the President's Palace cost approximately US$45 million
spent from government funds and hundreds of millions of US dollars were lost
recently to a European company, contracted to build a luxury presidential super-yacht,
when the company went into liquidation. There are also reliable indications
that millions of US dollars in cash are taken out of the country as diplomatic
cargo in preparation for the President's departure in the event he has to flee
the country.
While the government of the Maldives continues to be negligent in terms of using government reserves and revenue, it continues to borrow money from international institutions and to seek foreign government assistance. International aid and assistance are used to provide basic services such as health, education, social welfare, and other economic development programmes that ought to be funded by local reserves and revenue.
Misuse of International Aid
According to IMF Statistics (dated 28 February 2001) the Maldives had multilateral claims of US$80 million as at the end of March 2001 and another US$32 million is owing to banks, out of which $US 21 million have to be paid off within a year.
The Maldives received official development assistance as both grants and concessional loans at an average of about US$40 million per year during 1994-1998 (on disbursement basis). For instance, in February 2000 the World Bank provided assistance for an education project for a third consecutive time, amounting to US$17.4 million. During the period 1993-1995, the European Community (EC) funded three projects in the Maldives with a total EC contribution of ECU1.6 million in the tourism sector, fish inspection and empowerment of women. The Maldives has benefited from two regional tourism projects, supporting training and technical assistance.
While International aid and assistance are used to provide basic services such as health, education, social welfare, local reserves and revenue which should have been used to provide such services are used in dubious activities including the building of an unnecessary military force.
The National Security Service is a military organisation growing in number and based at different locations in the country. Every year 100 school- leavers are drafted and trained in conventional warfare in a country where the chances of fighting a conventional war are virtually negligible. The size of the organisation is becoming bigger than the armed forces of some of the developed countries in Pacific and Europe. The defence budget is unlimited, and the expenditure is more than what is spent in similar size military forces elsewhere, amounting to millions of US dollars a year. The organisation is not accountable or answerable to any authorities in the government including Audit Office for day to day spending. There was an instance when one of the colonels purchased a full household-lot of chattels, from a public store, for his mistress from the defence budget and no one questioned about that incident. There is no appreciation of the financial cost involved and economic implication of the whole military operation.
International aid and assistance programmes are misused for the purpose of diverting locally generated revenue to fund sectors such as defence which are not necessary in a "Least Developed Country" such as the Maldives where the population is only 250,000 people.
Usurpation of International Assistance
Since the Donor Roundtable Meeting decided that the Maldives
should retain its Least Developed Country status, it continues to receive international
aid and assistance by way of grants and loans for the development of the country.
According to a Programme Profile for the Maldives prepared by AusAid in March
1998, Australian assistance to the Maldives totalled A$3.5 million for the fiscal
year 1996-97 and was expected to rise to A$3.73 million in the 1997-98 fiscal
year. NZODA has revealed that in 1999 it provided scholarships to some 17 students
from Nepal, Maldives, Sri Lanka and Bhutan costing New Zealand taxpayers NZ$642,940
(there are no separate figures available for the Maldives).
While the people of these the donor countries are providing assistance in good faith to help the economically disadvantaged people in the Maldives, it has been usurped by those who are in charge of the authorities. There is a scholarship board in the Maldives, which is supposed to follow objective and impartial criteria in selecting candidates to go to donor countries for higher education. However, it is not uncommon for the most affluent people to usurp such opportunities.
For example, a member of the President's extended family obtained a letter from a chief of a rural island in support of her application to get AusAid funds to go to Australia. She had applied for a scholarship available only to a rural applicant. The letter from the government-appointed chief misrepresented her as a rural and disadvantage applicant. She completed her course at a university in New South Wales on AusAid.
In addition, the Maldives authorities take advantage of the good faith of certain donor countries by abusing what are seen as soft-touch loopholes in their legal systems. Certain countries that offer scholarships to Maldivian students have a system whereby those who are born in the country automatically acquire citizenship irrespective of the residence status of their parents. The Maldives elite target these countries in order to send married members of their families basically to have children while they and/ or their spouses are undertaking training programmes funded by the host-government.
In one case, a successful applicant's scholarship was postponed when the applicant had a miscarriage while still in the Maldives. As soon as she became pregnant again she proceeded to the donor country and had a child born there in order to acquire citizenship. She too was a member of the President's extended family. In these cases all available welfare benefits are claimed on behalf of the babies who have local citizenship rights. The good faith of the taxpayers of donor countries are clearly being abused by the affluent elite of a regime who are clearly securing safe havens to flee to if and when necessary. Unsuspecting taxpayers of donor countries are being taken for a ride.
Conclusion
The above brief analysis indicates that the growth in the Maldives economy does not help the affluence and the prosperity of its ordinary people because the government misuses revenue generated from the economy. Whilst revenue is misused the government continues to borrow money from international institutions, and it can afford to do that because there is no spending from revenue to the building of infrastructures and their sustainable development. Rather international aid is indirectly used to build infrastructures that should have been otherwise funded by revenue. Such infrastructures often includes dubious paramilitary establishments that are not necessary for the country. It is also concluded that international assistance does not reach the most deserving because the authorities usurp such assistance for the benefit of the ruling elite.
According to ADB it has been providing ongoing assistance, amongst other things, to strengthen the Audit Office, improve financial management in the public power utility sector, and strengthen the Statistics Section of the Ministry of Planning and National Development. ADB has also provided recent advisory services to enhance the judicial system and legal education, and is considering further assistance to strengthen the capacity of the public accounting system and the judiciary.
It appears that, ADB and other international organisations are not aware of the level of corruption that prevails in the Maldives, even though they are providing assistance to eradicate corruption. These assistance programmes might help to resolve some of these issues in the long run. However, in the meantime, should not the government officials in the Maldives be answerable to the international community for the series of events that is taking place?
It is the author's opinion that the international community has a right to know how the donations are used once they reached the destined countries. If such donations are misused, whether directly or indirectly, the international community should be able to questions about such misappropriations.