MDP accuses govt of wasting foreign currency revenue

The opposition Maldivian Democratic Party (MDP) on Wednesday accused the government of wasting foreign currency received as state revenue and through the banking system, with former Finance Minister Ibrahim Ameer blaming state expenditure for the shortage of US dollars in the market.

Speaking at a press conference held by the MDP’s Economic Committee, Ameer said the amount of foreign currency received by the government had increased, but questioned how the funds remaining after debt repayments had been used.

Ameer said the government had received about $3.5 billion in revenue during its two and a half years in office.

Of this amount, he said about $800 million had been used for debt servicing, excluding $400 million paid towards the currency swap arrangement with India.

Even after accounting for those payments, about $2.6 billion remained, Ameer said, adding that the government had not demonstrated how the money was spent.

“It is clear that the situation is worsening due to this government’s policies. First and foremost, before turning to citizens or businesses, the government must hold itself accountable,” Ameer said.

He attributed the rise in the parallel market dollar rate to government policies and expenditure, arguing that the administration had continued spending instead of reducing costs.

Ameer called on the government to reduce expenditure before imposing further foreign exchange requirements on individuals and businesses.

“This is a crisis the government has created through its own actions,” he said.

Ameer also warned that changes to foreign exchange policy could affect investor confidence and the Maldives’ position in attracting foreign investment.

His comments come as the parallel market exchange rate for the US dollar has risen above MVR 22, compared with the official bank rate of MVR 15.42.

The government has announced further amendments to the Foreign Exchange Act as part of measures to increase the amount of foreign currency entering the banking system.

Among the proposed changes is an increase in the share of foreign currency revenue resorts must convert through local banks from 20% to 40%. The government also plans to shorten the conversion period from three months to one month.

Separate amendments under consideration would introduce fines of up to MVR 1 million for foreign currency transactions conducted outside rates authorised by the Maldives Monetary Authority.