Tuesday 21st May 2024
Dhivehi Edition
News Reports Sports Business
Printing money

Government of Maldives Prints MVR 1.1 Billion in April

Malé, Maldives - The Government of Maldives has once again resorted to overdrawing from the central bank, as revealed by the Maldives Monetary Authority. The overdrawn amount reached a staggering MVR 1.7 billion by the end of April 2023, marking a significant increase from the previous month's overdrawn amount of MVR 600 million. This alarming trend has raised concerns among experts about the government's financial management and the consequences of such actions on the country's economy.
The government's practice of overdrawing money from the central bank comes as a result of the suspension of the Fiscal Responsibility Act, which initially took place in 2020 and has been extended for another year. The overdrawn amounts from both 2020 and 2021 have been converted into long-term bonds, with a repayment period of 50 years.
One of the major concerns surrounding this overdrawn amount is the potential impact on inflation in the Maldives. With the government injecting large sums of money into the economy, the supply of money in circulation increases. As a result, the purchasing power of the Maldivian Rufiyaa could be eroded, leading to higher prices for goods and services. Already, the country is witnessing a rise in the cost of living, making it increasingly challenging for the average citizen to afford their daily expenses.
Moreover, the consequences of the government's overdrawn amount are further compounded by difficulties in accessing US dollars at the bank rate. The scarcity of US dollars has created a black market for currency exchange, where individuals and businesses resort to acquiring foreign currency at higher rates. This situation not only disrupts the foreign exchange market but also negatively impacts businesses that rely on imported goods and services, leading to higher costs for consumers.
While the government claims that the Maldivian economy is in good shape, the prevailing circumstances paint a different picture. The excessive printing of money, coupled with rising inflation and limited access to foreign currency, indicates underlying issues that need to be addressed urgently. Experts and citizens alike are questioning the sustainability of this approach and its long-term effects on the economy.