Attempting to manage state expenditure by printing money will destroy financial systems: Opposition

Acting leader of the opposition PNC/ PPM coalition, Abdul Raheem Abdulla (Adhurey) | Photo: Mihaaru

Malé, Maldives – Opposition Coalition has stated that the incumbents government’s attempt to manage state expenditure by printing money is a way to destroy the financial system of the country.

The statement from the Opposition Coalition comes after the People’s Majilis scheduled to pass governments request to extend the overdraw period for the Public account for an additional year after it was sent through the Ministry of Finance to secure funds for day to day expenses such as government employee salaries.

The Maldivian Parliament previously approved the suspension of Article 32 (a)(b)(e) of the Fiscal Responsibility Act, ending on 26 April 2021 allowing for MVR 4.4 billion to be overdrawn from the MMA Public account due to the Covid-19 outbreak that took place in the Maldives last year to manage the states cash flow as the pandemic had severely affected the government’s income.

Opposition coalition parties have shown concern over the fact that the government requested approval for extension of the overdraw period without including the conditions that were presented by the central bank for the repayment and debt management plans.

Regarding this, the Opposition released a statement saying that the Governor of MMA, Ahmed Naseer said that the state had not properly discussed with the central bank on printing and taking more money than the debt limit amount and the the state had previously also turned a blind eye to the law and had printed as much money as they wished without having any discussion with the central bank.

The statement from the Opposition party read that the Governor had expressed concern over the fact that the state has not presented any plan on how they will pay back the debt till date and that they have not presented a proper plan on how the debts will be payed back even when the state requested to extend the time period. Opposition noted that international finance agencies such as the World Bank and IMF would not allow money to be overdrawn without a proper plan.

The Opposition stated that the although several international financial agencies have warned that the condition of the Maldivian economy may become worse than it currently is, the expenses of the state has reached up to the skies and that several things that can affect the lives of the citizens are happening such as the increased exchange rate of dollars.

This Coalition believes that the states attempt to print more money to govern for the rest of the presidential term without listening to the warnings sent by international agencies is a way to destroy the financial system of the country.

The statement from the Coalition read.

According to the law, the maximum amount of debts the state can take from MMA is one percent of the average income. This is about MVR 170 million considering the income Maldives received over the past few years. Along with this, the law also states that the state must pay back this amount within 91 days to the MMA.

However, due to the Covid-19 pandemic, the Finance Ministry had requested MMA on April 2020, to increase the maximum debt limit for the state to 20% of the income the state received over the past three years. This is MVR 4.4 billion. Along with this, the Ministry requested MMA to extend the time period to one year for the money to be payed back.

While the Ministry’s request was approved, it is set to expire tomorrow and the state has still not recovered from the loss the country has faced due to the pandemic. Following the governments request, Parliament of Maldives has passed to approve to extend the overdraw period for the Public account in Maldives Monetary Authority (MMA) by an additional year. 

Following a report compromised by a nine member committee which was selected to investigate the overdraw request after a motion proposed by MP of Alifushi constituency Mohamed Rasheed and supported by MP of Maradhoo constituency Ibrahim Shareef, the parliament has voted to pass the governments request with 47 votes while 4 members voted against it.