The Maldivian government is reportedly preparing to raise MVR 15 billion by selling a large plot of land in Hulhumale’ to the Maldives Monetary Authority (MMA) — a move that has triggered concerns over its economic impact.
The land, managed by the Housing Development Corporation (HDC), is expected to be sold for between MVR 14 billion and MVR 15 billion. While the government insists this does not constitute money printing, economic analysts argue that the plan closely mirrors it.
Raising Funds to Address Debt
The Maldives faces a significant debt burden, with USD 800 million in repayments due this year alone. This includes a USD 150 million payment at the end of March and another USD 25 million in April.
While the government’s MVR 56.6 billion budget for 2025 projected savings of MVR 7.7 billion, efforts to reduce spending have struggled to materialize. As a result, the administration appears to be seeking alternative ways to secure funds — including through this proposed land sale.
The Risks of Using the Central Bank
Although the transaction is being presented as a straightforward land purchase, concerns are growing that this method could have the same economic effects as printing money.
Central banks like the MMA typically manage inflation, stabilize the currency, and oversee financial stability. However, they can also inject money directly into the economy by purchasing government-issued securities or assets. This process — known as monetary financing — is often described as printing money, even if no physical currency is produced.
If the MMA’s purchase of the Hulhumale’ land sends the proceeds directly to the government, it risks inflating the money supply without generating new economic value. Critics warn this could undermine the stability of the Maldivian rufiyaa and worsen inflation.
Economic Risks and Inflation Concerns
Former President Mohamed Nasheed has warned that this move could push the US dollar exchange rate above MVR 24, significantly increasing the cost of imported goods. For a country that relies heavily on imports for essentials, this would drive inflation and raise the overall cost of living.
A weakened rufiyaa would also affect savings, reducing the value of citizens’ income while forcing businesses to pay more for imported materials and products.
In the worst-case scenario, this approach could create a cycle where rising prices, reduced purchasing power, and increasing economic uncertainty push the Maldives deeper into financial instability.
Historical Context and Political Tensions
The proposed land sale has added a political dimension to the economic debate. During the COVID-19 pandemic, the former administration printed MVR 8 billion to manage the economic downturn when tourism collapsed. That decision was heavily criticized by the now-ruling People’s National Congress (PNC), which promised to avoid such measures.
Now, critics argue that the current administration’s plan resembles the same approach they once condemned — only this time disguised as a land transaction.
Balancing Immediate Needs with Long-Term Stability
The Maldives’ financial position has become increasingly fragile following years of heavy borrowing. With substantial repayments looming and limited external financing options, the government appears to be turning to unconventional methods to bridge its funding gap.
The MMA has yet to confirm the land purchase, with final decisions expected after a board meeting. Meanwhile, concerns remain about whether this strategy will stabilize the economy or exacerbate existing vulnerabilities.
For the Maldives, the challenge lies in managing its immediate financial obligations without risking inflation, currency instability, or further economic uncertainty. Balancing these priorities will be critical in the months ahead.
