The Finance Ministry has informed parliament that the government does not wish to extend a permit granted during the covid-19 pandemic for the Maldives Monetary Authority (MMA) to print money or overdraw from the public bank account to finance government spending.
The level of debt the government could take from the central bank was limited by the fiscal responsibility law. However, in light of the pandemic, Parliament in April 2020 suspended the relevant provision in the law upon request from the government. The suspension period ends this year.
In a letter sent to Parliament, Finance Minister Dr. Mohamed Shafeeq asked MPs to end the exception under article 32 (a), (d) and (e) of the fiscal responsibility law on January 1, 2024 and to fully restore the law as the circumstance specified in article 36 no longer exists.
When the suspension is lifted, the government has decided to securitize the overdrawn amount and convert it to a long-term bond, Minister Shafeeq said in the letter to Parliament.
"And as included in the 2024 budget financing plan, when the exception period ends, it has been planned to securitize the amount overdrawn from the public bank account and convert it to a long-term bond to be issued from the MMA to the government," the letter stated.
Presenting the budget proposed for next year to Parliament, former Finance Minister Ibrahim Ameer said it was possible to restore the overdraw limit in the law next year.
Ameer said portions of the MVR 4.4 billion overdraw facility were securitized on two occasions.
