Finance Minister Dr Mohamed Shafeeq has asserted that the government has not received proactive counsel from the Maldives central bank, the Maldives Monetary Authority (MMA), on strengthening the country’s financial and economic conditions. This statement was made in response to a letter from the Parliament Secretariat seeking clarification.
In his letter addressed to Parliament Speaker Abdul Raheem Abdulla, Minister Shafeeq noted that since the current administration took office, MMA has not provided unsolicited advice to the Ministry of Finance. However, he acknowledged that discussions were held with MMA at the end of last year to undertake policy-level work. During these discussions, the Ministry requested MMA to better regulate the foreign currency exchange business, leading to technical-level meetings on strengthening the foreign exchange market.
The Minister expressed concerns about the alignment of fiscal and monetary policy, highlighting that the decision by MMA to raise the minimum reserve requirement (MRR) posed challenges to financial transactions with commercial banks. He stated that solutions have since been found in meetings with MMA.
This clarification followed a request from the Public Accounts Committee, which had decided to request the removal of MMA Governor Ali Hashim, citing the central bank’s failure to fulfil its responsibilities amid the country’s economic difficulties. The committee’s decision was based on the perceived lack of support from MMA during a time of economic weakening.
In response to these allegations, Governor Ali Hashim submitted a report to parliament, defending MMA’s actions and emphasising that the central bank had consistently provided necessary information, counsel, and assistance to prevent an economic crisis. He argued that the primary reason for the current economic challenges was the government’s failure to heed advice from MMA and international financial institutions over the past two years.
Governor Hashim highlighted that MMA had advised on preventative measures before the onset of the economic crisis and continues to address economic difficulties with wisdom and foresight. He stressed that the state had not maintained the fiscal discipline advocated by MMA, contributing to the current situation.
“Even in the past two years, in discussions held in the Parliament’s Public Accounts Committee, it has been pointed out that there are risks to the economy, and advice was provided to the government and other related agencies on the importance of taking preventive action,” Governor Hashim stated in his report.
He assured that both he and MMA would provide full cooperation and support during this challenging period, emphasising the need for the entire state to work together to overcome the economic difficulties. The report also noted that MMA is cooperating with the government’s reform agenda and has made adjustments to some of its decisions at the request of the Ministry of Finance.
The contrasting perspectives highlight a critical juncture in the Maldives’ approach to economic management, underscoring the need for cohesive and cooperative efforts between the government and MMA to navigate the financial challenges facing the nation.
