MP Siyam Warns Civil Service Salary Hikes Could Fuel Inflation

Ahmed Siyam Mohamed, president of the Maldives Development Alliance (MDA) and Member of Parliament for Dh. Meedhoo, has warned that the government’s recent plan to raise salaries for thousands of civil servants could trigger inflation and result in substantial economic losses.

During Tuesday’s parliamentary debate on the proposed state budget for next year, Siyam cautioned that any immediate salary increases would push up the prices of goods and services, leading to higher expenditure and financial strain. He added that while he supports salary increases, they should be implemented at an appropriate time.

advertisement

advertisement

advertisement

Earlier, Maldives Monetary Authority (MMA) Governor Ahmed Munawwar had advised the Parliament’s Budget Review Committee that raising salaries across all sectors simultaneously could place excessive pressure on the financing market. He urged the government to implement any increases in a phased and structured manner.

Despite these warnings, the government has raised the salaries of thousands of civil servants across multiple sectors, effective from 1 November.

Siyam highlighted the current economic pressures facing the country, noting that businesses which previously borrowed at interest rates of seven to eight percent are now taking loans at rates between 10 and 12 percent. He said this indicates the high value of money circulating in the economy, largely due to the Maldives’ heavy debt burden.

He further pointed out that the government must repay USD 1 billion in loans next year, a task he said would likely require issuing bonds, effectively another form of borrowing.

In response, Siyam called on the government to reduce state expenditure by around 40 percent and urged officials to evaluate whether all current spending is necessary. He cited the example of numerous airports built at high costs that remain largely unused.