Yameen says MMA measures won't resolve dollar shortage

Former President Abdulla Yameen said Thursday that the Maldives Monetary Authority’s (MMA) decision to withhold MVR 2 billion in excess Maldivian rufiyaa from circulation will not resolve the shortage of US dollars or the high exchange rates in the parallel market.

The MMA announced Thursday that MVR 7 billion more than the equivalent value of US dollars was in circulation in the economy. To maintain the value of the Maldivian rufiyaa, MVR 2 billion has been withheld from circulation.

Speaking at a series of meetings at his People’s National Front (PNF) office, Yameen said it is estimated that MVR 12 billion is circulating as excess liquidity. Of this, the MVR 2 billion withheld amounts to only about 6 per cent.

“My question is, can the value of the dollar be controlled by only 6 per cent? No. The shortage of dollars remains unaddressed,” he said.

Yameen said that to address the dollar shortage, the government had amended the Foreign Exchange Act to require tourism businesses to convert 20 per cent of their dollar earnings into Maldivian rufiyaa. However, he said more than seven months had passed since the policy was implemented, and it had not resolved the problem.

“Last quarter, we saw tourism businesses convert only about USD 300 million. What is that? Those figures do not solve the problem,” he said.

He added that whether or not the MVR is withdrawn from circulation, removing only MVR 2 billion from the estimated MVR 12 billion would not be sufficient.

Yameen also alleged that the government intends to raise funds for the upcoming council elections through the MMA. He claimed that the government had asked MMA Governor Ahmed Munawwar to release reserves to pay contractors for the Rasmale project, but Munawwar refused.

According to Yameen, the Rasmale project has now halted due to the non-payment, and the dredger brought in by the contractor has been removed. He said the government requires MVR 400 million for the council elections.

“President Muizzu will not be able to obtain MVR 400 million for the local council elections. Now the MMA has received MVR 2 billion. Is he going to take MVR 2 billion from it?” Yameen asked, before answering himself: “My thinking is that the government is trying to take the money from the MMA because they cannot raise it otherwise.”

He further said Munawwar might agree to provide the funds if they are in Maldivian rufiyaa rather than US dollars, as dollars are needed to pay foreign debt.