Ahmed Zuhoor, a former government official and World Bank consultant, has warned that the exchange rate for the US dollar could surge to MVR 30 if the current foreign currency crisis remains unaddressed.
In an interview with Adhadhu, Zuhoor said that the pressure on the dollar will continue to intensify as long as the government persists with wasteful spending. He asserted that without immediate intervention and positive structural changes, the dollar rate is guaranteed to reach MVR 30 in the near future.
"Extravagant spending is ongoing. This pressure on the dollar cannot be alleviated while such expenditures continue. This is not a crisis created by the public; it is the result of the irresponsibility of successive governments entrusted with the state," Zuhoor said.
"Therefore, if those in power manage this effectively, conduct the necessary research, and commit to bringing positive changes across all fronts, we will see improvement. Otherwise, I can guarantee that the dollar rate will climb to MVR 30 in the near future."
To resolve the dollar shortage, Zuhoor proposed that the state budget for the upcoming year must be slashed by 40 percent. He noted that such a reduction would ease the pressure on foreign reserves and lead to a favorable adjustment in the exchange rate.
"If we want to release the pressure on the dollar in the short term, the Maldives' budget for next year must be reduced by 40 percent, with further cuts the following year. This means that unless a budget currently at MVR 70 billion is brought down to MVR 35 billion, MVR 40 billion, or at least MVR 50 billion, the pressure on the dollar will not subside."
Zuhoor further observed that the dollar market has shown signs of stress since the current administration took office. He pointed to policies mandating businesses to exchange foreign currency and the government’s public emphasis on securing dollars for debt repayment as indicators of this strain.
Additionally, Zuhoor highlighted that while the circulation of the local currency has increased exponentially, the rate of dollar outflow from the country has also continued to rise.
With the government unable to curb the rising cost of foreign currency, the black market rate for a US dollar currently stands at MVR 22.90. Experts predict this rate will continue to climb in the coming days.
Meanwhile, the Parliament’s Public Accounts Committee has recently passed amendments to the Foreign Exchange Act, introducing heavy fines for individuals and businesses selling dollars at rates higher than the official exchange rate set by the Maldives Monetary Authority (MMA).
