The Central Bank of Maldives (MMA) has pledged to increase the supply of US dollars to commercial banks in 2024, a move aimed at easing liquidity pressures in the foreign exchange market. The announcement was made by Deputy Governor Ahmed Imad during a parliamentary finance committee meeting.
MP Ibrahim Shareef raised concerns about banks facing decreased access to dollars, potentially hindering businesses that require foreign currency. In response, Imad confirmed that the MMA will be increasing the amount of dollars issued to banks this year, surpassing the 2023 allocation. Assistant Governor Idham Hussain stated that the total amount is expected to reach USD 314 million, up from approximately USD 260 million last year.
This decision comes amidst reports from the Bank of Maldives (BML) regarding difficulties in acquiring foreign currency. The situation has been exacerbated by the government’s decision to raise the card limit for Maldivian students studying abroad.
Consequences of Dollar Shortage
A shortage of US dollars can have significant repercussions for an economy. Businesses that rely on imports may struggle to pay for necessary goods and services, leading to supply chain disruptions and higher prices for consumers. Additionally, a dollar shortage can make it difficult for companies to repay foreign debt or attract foreign investment. In severe cases, a dollar shortage can undermine investor confidence and destabilize the local currency.
