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Mulaku MP Abdullah Yameen has said that economic problems are piling up, but no direct action is being taken by central bank Maldives Monetary Authority (MMA) to address these problems.

While speaking at the Budget Committee meeting today which was also attended by MMA Governor Fazeel Najeeb, Yameen said that MMA is mandated to control the exchange rate of the Maldivian Rufiya and determine other monetary policies; however, instead of working to rectify the negative impact on the economy of a deficit budget which has lasted for several years, MMA only focuses on allowing the market forces of demand and supply solve these problems without intervention.

“I know that the MMA Act says to provide advice on the government’s budgetary policy. When a law asks to give advice, we know that it’s no usual advice. Our concern is the continuous budget deficit over so many years.In my estimate, MMA has to do more than give advice. MMA Act obligates MMA to do this, therefore it should be concerned about the situation of the fiscal and monetary policies. This results in inflation, leaving the people to suffer. That’s what happens,” Yameen said.

He said that the government has been purchasing T-bills to finance the deficit, which results in even the private sector having to suffer, which means that MMA should now take direct action to address these problems. He urged the governor to hold discussions with the government to take action within MMA’s mandate.

In response to Yameen’s claims, Fazeel Najeeb said that MMA had set a monetary policy last year and that action taken in relation to this policy will become evident soon.

In this regard, he said that efforts are under way to reduce the net reserve requirement for banks, but also highlighted counter measures must be in place before such action can be taken.

“We want to invest more in the private sector. But if we do that, we face the problem of insufficient foreign currency. The result will be the same as when the value of Rufiya was lowered. That’s what will happen in the absence of counter measures. So we are trying to rectify problems slowly, without disrupting the system too much,” he said.

When Fazeel shared with the committee some of the changes he had in mind, Maamigili MP Gasim Ibrahim advised to refrain from taking any drastic changes such as increasing the interest rate, which could result in a complete collapse of the economy.