In 2015 the European Union was taken by storm over news that one of its member nations had defaulted on a €1.6 billion payment to the International Monetary Foundation. This was the first time a member of the European Union had defaulted and faced bankruptcy. The nation in question was the home of the once mighty civilization, Greece.
The fall of the Greek economy was the culmination of inflation, poor fiscal management and fraud. Prior to joining the European Union, Greek pursued an expansionary fiscal policy including a universal healthcare system which proved itself to be a major burden for the government. While the government’s expenditure was significantly raised in the 1980’s its revenue remained much same.
A contributing factor to this was the fact that it was a norm in Greece to underreport income. This led to a serious loss in state revenue as the state was not receiving the annually projected income from taxes. This was further exacerbated due to massive tax cuts for the wealthy. This ultimately led to a rising inflation and a massive debt on the state as it desperately attempted to manage the economy.
For Greece, the European Union and its European Monetary Union (EMU) was the means to solve the government debt and inflation problem. However, joining the European Union also meant that Greece had to conform to the strict regulations by the European Union, outlined in the 1992 Maastrihct Treaty. Under this treaty member countries of the European Union would have to limit the Government deficit to 3% of the GDP and its debt to 60% of its GDP.
After spending close to a decade trying to mitigate its debts, Greece was finally granted a conditional acceptance into the European Monetary Union in 2001.
However, the truth was that Greece never managed to lower its government’s deficit and the state debt to the thresholds outlined in the Maastricht Treaty.
While the initial period following its entrance into the Euro zone was marked with a slight economic recovery, the underlying issues of weak fiscal management still persisted. The situation as further worsened by the lack of revenue for the state. Systemic tax-evasion was ingrained in the society as both the high income and low income underreported their spending leading to a drastically low social spending expenditure. In 2000, the total social spending expenditure in Greece was marked as 19.3% of the GDP where as in the same period it was marked as 26.2% in Germany.
Entry into Euro zone also allowed the Greek government to borrow massive loans cheaply form fellow member states and organizations. While the loans were meant to finance the government operations, it also proved to be an additional burden on the government as Greek’s income was still at the same levels as to when it entered the Euro zone.
The 2007 financial crisis unveiled the critical condition of the Greek economy. The recession forced the Greek government to finally address the massive deficit and debt as its tax revenues dried up. In 2010 U.S. financial regulators graded Greek bonds as “junk” forcing the Greek government to seek bailout through the International monetary Foundation and other credit agencies. The bailout was given under strict reformation conditions including higher tax revenues and budget cuts.
This led to a massive recession in Greece as unemployment reached of 25% just 2 years after the U.S. regulators deemed Greek bonds as “junk”.
The unemployment further contributed to a decrease in tax revenues, which finally cascaded into the state losing a significant chunk of its revenue. As the economy crumbled, the social conditions in Greek also worsened where crime, homelessness and drug abuse rose to unprecedented levels.
The Maldives is undeniably walking in the footsteps of Greece towards an inevitable state default and bankruptcy. The current administrations staunch refusal to adhere to the advice of the World Bank and other credit rating agency has led to a situation where the country is now standing on the threshold of bankruptcy.
The MVR 36.925 billion budget was passed by the Parliament without summoning the heads of the financial institutions in the Maldives nor without proper analysis of the budget. For financial analysts, implementing a budget with 34% of its revenue unsecured is alarming. The unprecedented MVR 9.760 billion deficit budget is reminiscent of the massive deficit-ridden budgets adopted by the Greek government prior to its downfall.
A more serious concern lies with the current administration’s reckless policy of borrowing from the central bank. Since 2020 the Government of Maldives has against the advice of IMF and World Bank, chosen to overdraft from the PBA at the Central Bank. This was done after freezing subsection (a), (d) and (e) of the Section 32 of the Fiscal Responsibility Act.
On 17th November 2021 the Parliament chose to suspend the sections of the Fiscal Responsibility Act which prevents indiscriminate printing of money for a third time since 2020. While initially promised to repay in 1 years’ time, the Government’s debt to the Central bank in the form of overdrafts has now racked up in excess of MVR 6.5 billion.
While the Government continues to indiscriminately borrow form both the central bank and foreign sources, the state debt is set to increase by an unpreceded MVR 11 billion this year, rising the total state debt to MVR 100 billion or the equivalent of 105% of the national GDP. The current administrations poor fiscal management is evident in the fact that from the MVR 100 billion debt, over MVR 50 billion was incurred over just the past 3 years.
While many of the international credit rating agencies have repeatedly lowered its rating on the Maldives, due to the government’s veil of secrecy surrounding its financial standings, it is unclear whether the Government is on the verge of bankruptcy or it is already bankrupt. One undeniable fact that remains is that the Government of Maldives is walking in the footsteps of Greece, towards a massive default and bankruptcy.
How Ukraine grain shipments process from Black Sea ports to Türkiye
The Turkish-brokered agreement allows millions of tons of grain stuck in Ukrainian ports due to Moscow’s blockade to reach international markets. Here is how it works.
As the armed conflict between Russia and Ukraine raged on for months and Moscow blocked grain exports from the besieged nation, the world stared at a very real possibility of a global food shortage.
Ukraine and Russia are the two biggest wheat and grain producers, often referred to as the world’s ‘bread basket’, and their military conflict has already increased global food prices.
But the Turkish-engineered Black Sea Grain Initiative, a grain export deal signed on July 22 between Kiev and Moscow, finally became a reality, bringing a new dimension to the conflict and calming food prices. With the deal, both sides agreed on a grain shipment arrangement to export Ukrainian grain from the country’s Black Sea ports to international markets.
A newly-inaugurated Istanbul-based Joint Coordination Centre (JCC), set up by the Black Sea Grain Initiative and inclusive of Russian, Ukrainian, Turkish and UN officials, monitors the shipments’ safe journey from Ukraine to Türkiye, from which the exports will move to their next destination.
Last week, the first ship carrying a 26,000-tonne cargo of corn left the Ukrainian port of Odessa to reach Istanbul, where it “was cleared to proceed to Lebanon” on Wednesday after “a scheduled inspection stopover”, according to the JCC.
Since Razoni’s departure, nine other ships have left Ukrainian ports for Istanbul for inspections, according to the Turkish defence ministry.
While Ukraine-Russia negotiations on the grain deal have long been a complicated issue, many people around the world concerned about food security wonder how the shipment process works.
Here is a brief guide to the process:
First step: Ships leave Ukrainian ports
First, the JCC-approved grain-carrying ships like the Sierra Leone-flagged Razoni, which was the first merchant vessel to leave Ukraine, departs from Kiev’s designated ports, according to the deal. There are three designated Ukrainian ports —Odessa, Pivdennyi and Chornomorsk—for the grain shipments.
The grain deal does not allow empty ships and vessels to leave Ukrainian ports. For now, per day, only three or four grain ships can depart from Black Sea ports and Ukraine can export only three million tons of grain each month.
Prior to the grain deal, more than 25 million tons of grain were stuck in Ukrainian ports, according to Turkish Defence Minister Hulusi Akar, due to the Russian blockade, increasing food prices across the globe. After the Ankara-brokered deal, the grain prices decreased sharply.
Second step: Ships sail through JCC corridor
Grain ships are using a JCC-secured maritime humanitarian corridor in the Black Sea until they reach Turkish waters. The corridor, which has been agreed upon by both Ukrainian and Russian sides, alongside Türkiye and the UN, serves to provide a safe journey for ships, protecting them from minefields and other possible dangers.
During their voyage, grain ships will be tracked via satellite and drones. According to the agreement, ships that turn off their signals and do not provide transparent information about port call points will not be admitted to Turkish territorial waters. Russia will also be able to export grain and fertiliser through the corridor.
Third step: JCC-led inspections in Istanbul
After reaching Turkish waters, ships should stop by in Istanbul for the JCC’s inspections. The JCC will proceed with its inspections at entrances and departure from Istanbul ports.
“A joint civilian inspection team comprising officials from the Russian Federation, Türkiye, Ukraine and the United Nations visited the merchant vessel Razoni this morning (Wednesday),” said a statement from the JCC, confirming that the ship’s crew and load are “authorised and consistent” with the information the monitoring centre received before it sailed from Odessa.
“This marks the conclusion of an initial ‘proof of concept’ operation to execute the agreement,” added the statement, meaning that the first mission’s success will be a good measure of assurance for next shipments.
During the inspections, the JCC team asked questions to the Razoni crew about how safe the journey was in order to assess the security level of the JCC-monitored corridor and gain “valuable information”.
“The JCC will use this voyage in its ongoing work on fine-tuning procedures and processes to enable the continuation of safe passage of commercial vessels across the Black Sea under the Initiative,” the statement said.
Fourth step: reaching international markets
After the grain ships departing from Ukraine are inspected in Istanbul, they will sail to their final destination in international markets.
Razoni is set to sailing toward Lebanon, an eastern Mediterranean country hit by a terrible financial crisis. But the ship has not reached Lebanon yet, according to Ukraine’s Lebanon embassy. After going through inspections in Istanbul, the other ships will also be set to their respective destinations.
Right now, Panama-flagged Navistar is going to Ireland and Malta-flagged Rojen is moving to the UK. Türkiye-flagged Polarnet already reached its final destination, Derince, a district in Türkiye’s Izmit, a Turkish Black Sea city.
There will be three other ships to reach Türkiye after Istanbul inspections. The two ships, Mustafa Necati and Sacura, will go to Italy and Star Helena will sail toward China.
Applications open for Allied Community Fund and Education Fund
Allied Insurance Company of the Maldives has introduced funding programmes under its community social responsibility initiative, Premium for Good.
At a press conference held at the company headquarters, the Allied Community Fund and Allied Education Fund were launched by General Manager Ibrahim Firushan. Speaking at the press conference, he said the programmes are an initiative that Allied has been planning with great hope and the aim is to provide a way for people in all parts of the Maldives to remove financial barriers to improve communities.
The Allied Community Fund is a funding programme that empowers people living in the provinces to make community-beneficial ideas a reality in six areas. Allied has opened applications for projects in the fields of health, social services, environmental protection, women’s and children’s rights, education and history. Applications should be submitted by email by August 31 and the four best ideas will be awarded USD3,250.
The second funding programme newly added to the Premium for Good framework; the Allied Education Fund is an addition to Allied’s efforts to strengthen the education system. The insurance company revealed the opportunities to apply for funding through the programme are beneficial ideas for students and teachers and applications should be submitted by August 31.
Launched in 2018, Premium for Good is a framework designed to sustain Allied’s community social responsibility initiatives.
Moolee celebrates three successful years
Moolee, the e-commerce platform of Ooredoo Maldives, has celebrated three successful years of connecting businesses and customers to enable a nationwide online shopping experience.
Moolee was officially launched in August 2019, and since then has belted over 20,000 deliveries across the Maldives including a vast variety of quality products with over 18 categories including consumer electronics, gaming products, books and stationaries, home and kitchen, and lifestyle products from over 50 reputable businesses.
To celebrate the new milestone and to thank its shoppers, Moolee has planned fun and interactive online engagement activities with exciting gifts throughout the month of August. More details of the anniversary activities will be announced on Moolee social media pages, said the telecommunications company.
Since the launch of the platform, Moolee has seen rapid growth and continues to prosper to provide its consumers a seamless digital shopping experience with its services like online payments, free nationwide delivery, easy returns, and genuine product availability for buyers to shop with confidence.
The platform also thrives in facilitating small business owners and online retailers to reach a bigger customer base with free nationwide delivery services. With many more small and medium enterprises (SMEs) coming on board Moolee looks forward to catering to a broader customer base with more products on the platform, Ooredoo Maldives said.
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