Covid-19: Cabinet finalizes 20% pay cut from all political appointees as cost-cutting measure

The state has announced its decision to reduce wages of political appointees by 20% and temporarily shut down all government offices for one week.

The decision was finalized at a Cabinet meeting held on Tuesday.

While there are currently 785 political appointees in office, their salaries amount to MVR 331،718،861 of the state budget allocated for 2020. Therefore, the state spends MVR 27,643,238.40 per month on wages for political appointees.

As such, a 20% pay cut from political appointees will reduce state expenses by MVR 5,528,647.60 per month and MVR 55,286,480 for the entire year.

The government had previously announced its decision to decrease state expenditure by MVR one billion under efforts to combat the spread of Covid-19 in the Maldives.

Additionally, the Maldives’ Cabinet determined to temporarily close down all government offices for a period of one week, effective from March 19th up until March 26th.

The state has initiated many cost-cutting measures in efforts against the spread of Covid-19 and has previously revealed plans to reduce MVR 1 billion from state expenses.

With the discovery of Covid-19 cases in the country, President Ibrahim Mohamed Solih has stated that an economic downturn is expected. He stated that a 6.9 billion reduction will be seen from state revenue whereas GDP will fall in between 0.5 to minus 5.6%. As such, he assured that the state's cost-cutting measures do not include cutting the wages of civil servants.

Additionally, while speaking at the SAARC leaders’ video conference on Sunday, the president stated that the negative impact on tourism will decrease foreign revenue by USD 450 million. The total forecast for losses in state revenue due to the economic downturn is between USD 135.9 million and USD 446.9 million.