Auditor General comments on Government's policy on spending cuts

Auditor General Hussain Niyazi stated today at the Budget Review Committee that the state’s proposed budget for next year lacks details on planned cost-cutting measures, and that the government's policy on expenditure reduction has now become something that is endlessly delayed. 

Addressing the committee regarding the proposed state budget for the upcoming year, Niyazi asserted that the reason the government cannot reduce its debt is due to excessively high expenditure. He also noted that the current spending trajectory is not sustainable.

"The policy on reducing expenditures is not at a sustainable level. We all know this. We delay and postpone this every year. How long can we keep putting this off?" the Auditor General questioned.

The Auditor General expressed concern that unlike previous years, the details of cost-cutting measures are absent from this year's budget book.

"As a principle, it is acceptable (not to include something you won't do). There's no need to include something that won't be executed. However, the question is, how long can we postpone this? That is what needs to be looked at," he stated.

Niyazi cautioned that without expenditure reductions, the debt issue will only worsen, leading to an increase in debt. He recommended Parliament to ask the Ministry of Finance for guidelines on cutting expenditures, even as the budget is being approved. In addition, Niyazi emphasized the importance of transparently including project details in the budget book, describing this as a best practice.

While the budget may not disclose the principles used to determine which islands receive projects, he trusts that the information is available to them during their audit processes.

"When the Parliament passes a budget, you (MPs) need to know how those matters (project details) were finalized; we receive that information when we audit. However, it is not in the budget book," the Auditor General said.

In the advice provided by the Audit Office concerning the budget, they noted that while the Ministry of Finance has a plan for repaying large debts next year, the steps taken will likely increase the debt portfolio. The Audit Office advised that to resolve this, the government must adhere to the targets outlined in the medium-term debt strategies.

The Audit Office also highlighted that the deteriorating fiscal situation has already caused significant challenges in securing external loans in recent years, leading to increased pressure on domestic borrowing.

The proposed state budget submitted to the Parliament for the coming year amounts to MVR 64.2 billion.