MRMD Arrears Under Review as Government Considers Zero-Rating the Debts
The Auditor-General has disclosed that the Ministry of Rural and Maritime Development and Disaster Management (MRMD) recorded revenue arrears totaling about $2,068,777 as at July 31, 2023, tied to unpaid business and liquor licences. The 2023 General Administration Sector report, presented in Parliament recently, warned that delays in recovering arrears risk the revenue becoming irrecoverable and being written off, potentially costing the Government revenue. It urged MRMD to seek approval from the Ministry of Finance and Cabinet on the way forward for recovery and the recording of Arrears of Revenue.
MRMD’s response indicated that the issue had been under discussion for several years. In a memorandum dated May 27, 2024, the Ministry of Finance noted that the arrears identified by MRMD largely involved licences associated with non-renewal. The memo explained that MRMD issues licences only after payment has been made: no payment, no licence. Consequently, while these sums are a form of revenue, they are not considered arrears in the conventional sense. The Ministry of Finance has proposed that MRMD seek Cabinet’s approval to formally zero-rate the arrears.
Context and implications
– The situation highlights a tension between revenue recognition and licensing practices, where revenue is generated only upon payment, challenging traditional arrears accounting.
– A decision to zero-rate the arrears would effectively remove these balances from the books, aligning accounting with the ministry’s licensing policy.
– The development sits within a broader governmental push to address revenue arrears and improve financial governance, a theme echoed in other ministries that are pursuing debt recovery strategies and system upgrades.
Editor’s notes and broader context
– Ongoing reforms in related ministries, such as upgrading outdated licensing and leasing systems and implementing debt recovery plans, reflect a broader move toward stronger enforcement, better monitoring, and greater transparency in public finances.
– If Cabinet approves zero-rating, MRMD will need clear policy guidelines on how to maintain revenue integrity going forward, including indicators for timely licence renewal and explicit procedures for recording future arrears or recoveries.
– A careful communications approach will help manage stakeholder expectations, ensuring business operators understand licensing conditions remain payment-dependent and that any restructuring or write-offs are conducted transparently and in line with government policy.
Summary
MRMD is evaluating its approach to a modest backlog of licence-related revenues, with the possibility of formally canceling the arrears upon Cabinet approval. The move reflects both the ministry’s licensing practices and a broader government effort to address revenue collection challenges through policy reform and improved financial governance.
Potential implications for readers
– Businesses operating under MRMD licensing arrangements should note that licences are issued only when payments are made, and any policy changes could affect how past balances are treated.
– The decision could set a precedent for how similar arrears are handled in other ministries, depending on Cabinet direction and policy guidelines.
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