Former Finance Minister Ibrahim Ameer said today that while the government points fingers at the public and businesses over the dollar shortage, the crisis was actually triggered by the administration's wasteful spending of foreign currency reserves.
Speaking at a press conference held by the Maldivian Democratic Party’s (MDP) Macroeconomic Committee, Ameer heavily criticized both the government and the central bank, the Maldives Monetary Authority (MMA).
Ameer attributed the current situation to several factors, including the failure to control the rufiyaa supply, money printing, the inability to secure external financing for the budget, and the government’s inconsistent policies.
Regarding the rufiyaa supply, Ameer alleged that the situation deteriorated because the Governor of the MMA has been operating according to the government's whims. He pointed out that despite claims of implementing a contractionary monetary policy, the central bank has been doing the exact opposite.
Ameer and the MDP allege that the current administration has engaged in money printing by having the MMA facilitate government security investments through banks and the Pension Office. Ameer claimed that a total of MVR 6.1 billion has been printed this way, including MVR 3.7 billion through banks and MVR 2.4 billion through the Pension Office.
"Even though the budget includes securing foreign financing, the government has failed to obtain those funds and is instead proceeding by printing money from the domestic market," he said.
Addressing the issue of money printing, Ameer argued that the MVR 8 billion printed during the MDP administration cannot be compared to the current situation. The present government maintains that the excess liquidity from the MDP’s tenure is the root cause of the current spike in dollar rates.
However, Ameer countered that the circumstances then and now are incomparable, adding that blaming previous currency injections is irresponsible. He asserted that the real reason for the rising dollar rate is the failure of the government’s incoherent and weak policies.
Describing the current administration's approach as typical of authoritarian regimes, Ameer remarked that these are measures usually seen in failing economies. He noted that no country has ever overcome financial distress by adopting such tactics.
Ameer further stated that the government is taking every measure except the ones actually required. He emphasized that the administration has failed to implement necessary structural reforms.
"What they are actually failing to do is reduce expenditure. They are doing everything else but that," Ameer said.
As examples of wasteful spending, Ameer cited the Rasmalé project and the purchase of military drones. He claimed the government has spent $285 million on such ventures. While these expenditures continue, he noted that the administration has failed to secure any new foreign funding.
The former minister pointed out that while the government budgeted for $2.6 billion in external financing over the past years, it has not secured anywhere near that amount. Ameer noted that the $800 million received during this administration’s first year and a half consisted of project financing arranged long ago. He concluded that these failures are what continue to drive the mounting pressure on the dollar.
