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Cablegate: The Maldives has Greatly Improved Its Budget

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PP RUEHBI RUEHCI RUEHLH
DE RUEHLM #0034/01 0191000
ZNR UUUUU ZZH
P 191000Z JAN 10
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC PRIORITY 1124
INFO RUEHKA/AMEMBASSY DHAKA PRIORITY 2267
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 9289
RUEHKT/AMEMBASSY KATHMANDU PRIORITY 7544
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 3702
RUEHCG/AMCONSUL CHENNAI PRIORITY 9850
RUEHKP/AMCONSUL KARACHI PRIORITY 2643
RUEHCI/AMCONSUL KOLKATA PRIORITY 0503
RUEHLH/AMCONSUL LAHORE PRIORITY 0129
RUEHBI/AMCONSUL MUMBAI PRIORITY 7139
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

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

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