Talking Economy: Timely disbursement of payment for private sector needed to run the economy

Economists, underscoring Maldives’ economy is run with the participation of the private sector, has emphasized the importance of disbursing pending dues to private sector in order to keep the economy running.

Former head of central bank’s Financial Intelligence Unit (FIU) and economist, Athif Shakoor said Maldives National Association of Construction (MNACI) was undertaking efforts to recover MVR 2 billion owed to contractors in connection to various projects. While the issue of delays in the disbursement of payment has been raised with the parliament, Athif said the delays can stall economic development.

“A nation’s economy is run by the private sector. The government is the regulator. We are all aware of the state of our SOEs. Henceforth, I hope a priority is allocated to settle the payments owed to private sector as efforts to increase the state’s revenue commences,” he said.

With reference to Athif’s remarks, former Economic Minister Ahmed Mohamed states latest statistics publicized shows that the current administration has disbursed MVR 4 billion from the MVR 9 billion owed to Maldivian companies. However, he stressed the importance of ensuring the remaining MVR 5 billion is disbursed.

Ahmed said private companies’ finances are disrupted when payments owed to them are delayed.

In this regard, he detailed the companies already undertaking business after taking overdrafts and loans from banks to relieve the difficulties arising due to delayed payments face additional difficulties when pending dues a delayed such as lacking funds for their operations, paying the salaries of its staff and ultimately continuing the business.

“This is why the private sector is being destroyed,” he added.

Ahmed emphasized the need for the government to be vigilant in the timely arrangement of pending dues.

Speaking further, Ahmed noted that approximately 80 islands leased for resort development remain incomplete. He said facilitating a way to complete the development of these islands would open doors for an additional source of revenue to both the government and the private sector.

“If resorts at these islands are operationalized, the numbers on the reports publicized by the government indicates that they will share USD 1.7 billion in the Maldivian economy per annum. It also notes that it will create approximately 16,000 jobs,” he said.

Former financial controller and state minister for finance Ahmed Assadh who also appeared on the program spoke regarding the importance of taking measures to increase the state’s earnings, paying pending dues to contractors in a timely manner and taking measures to eliminate delays in payment of pending dues to contractors.

“Need to deeply focus on the issues with the system. Non-payment of MVR 9 billion is a huge issue. This should not be repeated,” he said.

Assadh said if the government borrows loans from local financial institutions, the interest rates spike by the time private companies wish to borrow loans which ultimately increases their expenses.

“If the interest rate is not lowered, businesspersons are forced to borrow loans at high rates,” he said.