Anti-overdraft govt attracts criticism over move to print money

The current government, which had come to power with a strong anti-overdraft or anti-money printing policy, has reportedly decided for a significant overdraft from the central bank – a decision that has sparked both public and political outrage.

The incumbent administration led by President Dr. Mohamed Muizzu, made the key pledge against printing more money, which Dr. Muizzu claimed destabilized the Maldivian economy and devalued the currency. His campaign strongly criticized the former Maldivian Democratic Party (MDP)-led government for printing and injecting more local currency into the Maldives economy – which resulted in US dollar exchange rates shooting up into unprecedented levels.

While speaking at the Republic Day celebratory ceremony, President Muizzu claimed the current government had inherited the most deficient economy to date. He said the country’s economy crippled mostly owing to the former government’s decision to print and inject MVR 8 billion to the country’s economy.

Former government officials had defended the overdraft decision claiming it was a compulsory step during Covid-19 pandemic during which the global economy had receded.

Dr. Muizzu continued with affirmations his administration will not print money unlike the predecessors, and assured fixing the economy without resorting to such an eventuality.

However, ‘Sun’ Online has learned from a trusted source that the Maldives government is seeking a massive land sale of a Housing Development Corporation (HDC)-plot to the Maldives Monetary Authority (MMA) – the central bank – for MVR 15 billion.

It has been learned President Muizzu met with the parliamentary members of the ruling People’s National Congress (PNC) at the presidential palace on Monday, where he had confirmed this decision.

Economically, injecting such a hefty sum that has not been released for circulation, would require money printing.

Speculations of the current government’s decision to print more money had been looming for days, though the administration did not make any formal comments about it.

The public’s primary concern is the government’s failure to maintain its anti-overdraft policy.

Meanwhile, MDP Chairperson and former Minister of Economic Development Fayyaz Ismail has sternly criticized President Muizzu.

“Dr. Muizzu’s promises are worth less than the paper his new money will be printed on,” Fayyaz criticized in a post on X, and added that the MVR 15 billion, to which state intends to sell the HDC-land to MMA, is not only the “largest quantity ever printed in the country, it is clear the money will be used to artificially inflate the government’s revenue…”

“Within the already fragile economic context of our nation, en masse printing of currency with no plan to use it ease real burdens on people will not only lead to higher inflation, with the average citizen bearing the brunt of the impact,” Fayyaz continued on his post.

He also claimed the Maldives central bank lacked the legal authority to print money for investments, and said both the MMA and its board must be held accountable.

Netizens have begun to criticize the current government, with one Twitter user comparing the current PNC-led government with its predecessor while another questioned the necessity for printing more money at a time of economic hurdles. The user also claimed that while the former government was necessitated in printing more money due to the Covid-19 pandemic when the country’s economy was “suspended”, there is not such situation right now.

Meanwhile, PNC member and Central-Hithadhoo MP Ahmed Azan has also criticized the state’s potential decision to print money. He said printing money of such a large sum would destabilize the economy and cause inflation.

Former President Mohamed Nasheed recently claimed the government is required to repay USD 150 million in external loans as of March this year, with the state required to repay an additional USD 25 million in April. Maldives government must service USD 800 million in external loans for the current year, which translates to MVR 12-13 billion; thus, explaining the significant land-sale.

Some economic experts who spoke with ‘Sun’ Online had opined the same, and noted that the land-sale was likely the government’s solution in securing finance to honor its debt obligations for the year.