Government structure requires reform: Governor

Governor of Maldives Monetary Authority (MMA) Fazeel Najeeb has said that the government structure is in need of reform, to allow for reductions in increasing government expenses in order to realise a prosperous economy.

Fazeel said this while speaking at the Parliament Committee on Public Accounts.

“In the Maldives we have a small economy, which means that the economy is not run by the money generated from the central bank. Thus the monetary policy is less effective. The government’s borrowing needs are high, and we have to accommodate that. We need a solution to this. I don’t think there is another way. I think we need a structure that we can manage, one that that suits our country,” he said.

He said that expenses have to be controlled in order to improve cash flow and other areas, and that discussions are ongoing with the Ministry of Finance in this regard. He said that savings must be increased to repay loans, and that taking loans to repay loans is not practical.

Referring to the issue of refusal to release funds to Finance Ministry, Fazeel said that MMA has never in the past withheld cheques of the Finance Ministry. He said that the two parties are in discussion about putting controls in place in order to manage cash flow and limit overdraws, which causes some difficulties. He said that the limit on overdraws had been increased from MVR 100 million to MVR 200 million.

He said that the 4.3 percent economic growth estimated for this year is a fair level of growth. He pointed out that a country must hold gross reserve sufficient for six months, but the gross reserve for the Maldives, at $344 million, is only enough for two months. He said that the gross reserve is likely to drop to $310 million by the end of June, while the net reserve is at $118 million.