MMA warns of salary hike pressure, urges phased rollout

The Maldives Monetary Authority (MMA) has cautioned that salary hikes in all sectors at once would strain the financing market, urging the government to implement increases in a phased and structured manner.

Speaking before the Parliament’s Budget Review Committee on Saturday, MMA Governor Ahmed Munawwar said the biggest challenge for next year’s budget is managing salary increases under the ongoing pay harmonisation initiative, which raised civil servant wages starting this month.

“When salaries increase, our most important advice was to continue it in phases. If all salaries are increased at once, pressure is likely to come,” Munawwar told the committee.

He warned that a simultaneous hike across all sectors would intensify pressure on the financing market, especially amid limited access to foreign loans and unstable foreign exchange reserves. Munawwar noted that the MMA currently receives dollars through the Foreign Exchange Act, taxes, and other revenue streams, but reserves have not reached the desired level.

The Governor described the foreign exchange situation as a risk for next year, though he said it could improve with increased reserves. The government has allocated MVR 1.7 billion for salary increases in 2026.

President Dr Mohamed Muizzu stated last week that the Pay Commission will engage with all offices regarding the salary changes and resolve any concerns. The Finance Ministry previously announced that overtime pay would be capped at 10 percent of base salary to promote a healthier work-life balance and encourage quality service during official hours. Adjustments were also made to allow more flexible working arrangements for certain roles.