Bill on extending Fiscal Responsibility Charter deadline ratified

President Dr Mohamed Muizzu on Tuesday ratified the bill of amendments to the Fiscal Responsibility Act to set the deadline at two years for the five-year Fiscal Responsibility Charter that every administration is required to formulate. 

With the ratification of the bill, which was passed in parliament on Monday, the government will need to draft a Fiscal Responsibility Charter within the next 24 months, have it approved and published in the gazette. 

The amendments further state that implementing actions under the Fiscal Responsibility Charter and completing feasibility studies on PSIP projects before including them in the State budget are not mandatory during this period.

As per the Fiscal Responsibility Act, submitted by the government and passed last year, a five-year Fiscal Responsibility Charter has to be created by the Finance Minister and published in the gazette within six months of the start of each presidential term. 

The purpose of this is to ensure that the fiscal policy in each five year term is sustainable and transparent. 

However, with the ratification of this bill, the deadline is now extended from six months to 24 months. The bill also removes a provision stating that the presidential term begins in 18 months.

In November last year, the government proposed the State Fiscal Responsibility Act replacing the State Expenditure Responsibility Act with the stated aim of strengthening procedures governing the printing of money.

As per the Fiscal Responsibility Act, the government may borrow from the central bank, Maldives Monetary Authority (MMA), to manage cash flow, with the amount capped at 2.5 percent of the average revenue over the past three years.