MVR 78 billion chasing $800 million, says Ilyas Labeeb

Former Hulhudhoo MP Ilyas Labeeb has argued that the Maldives' foreign currency shortage is being driven by the rapid growth in the amount of Maldivian rufiyaa in circulation, saying MVR 78 billion is now competing for an estimated USD 800 million entering the economy.

He made the remarks during an opposition Maldivian Democratic Party (MDP) panel discussion on Sunday night titled Dolhareh Neiy (No Dollars Left), held at Artificial Beach.

The panel also featured former Finance Minister Ibrahim Ameer and former Deputy Speaker of Parliament Eva Abdulla.

Speaking at the event, Ilyas said that while the Maldives Monetary Authority (MMA) has stated that foreign currency continues to enter the country through tourism and other sectors, attention should also be given to the growth in the domestic money supply.

Citing official statistics, he said the amount of Maldivian rufiyaa in circulation increased from MVR 41.4 billion at the end of 2020 to MVR 78.4 billion at the beginning of this month.

He said the increase had occurred despite President Dr Mohamed Muizzu's statements that his administration had not printed money.

According to Ilyas, reports published by the MMA, the Ministry of Finance, the World Bank and the International Monetary Fund (IMF) indicate that the money supply has expanded to around MVR 78 billion.

He argued that the increase in rufiyaa has intensified demand for foreign currency, as more local currency is competing for a limited supply of US dollars.

Ilyas said official figures indicate that around USD 800 million had entered the state budget, which, even when converted at parallel market exchange rates, would amount to about MVR 16 billion.

"Yet, we have MVR 78 billion sitting in our hands. Imagine how aggressively that volume of rufiyaa will chase after those few dollars," he said.

He also noted that the Maldives depends heavily on imports and relies on tourism as its main source of foreign currency earnings.

As a result, he said, the limited supply of foreign currency must meet the country's import and other external payment requirements, contributing to the current dollar shortage.