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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