Finance Minister Dr Mohamed Shafeeq has informed parliament that the moratorium on overdrawing public bank accounts (PBA) and printing money will conclude by the end of this month. Initially granted on April 26, 2020, the permission allowed the government to print up to MVR 4.4 billion annually, with successive extensions approved by the Majlis.
The Economic downfall brought on by the COVID-19 pandemic prompted the suspension of Article 32 (a), (d), and (e) of the Fiscal Responsibility Act, empowering the government to augment the overdraft limit of the public bank account at the central bank due to a notable decline in revenue.
In a letter read out during the parliamentary session, Finance Minister Dr Shafeeq conveyed the termination of the suspension related to state expenditure responsibility and permission for PBA overdrawing. The decision was attributed to the absence of the special natural conditions outlined in Section 36 of the Fiscal Responsibility Act. The letter explicitly stated that no decision had been made to extend the permit beyond its expiration on the 31st of this month.
Dr Shafeeq highlighted the reasons for terminating the permit, citing the country’s increased national output or real GDP growth rate in 2019 compared to pre-COVID levels. Additionally, he pointed out a significant surge in government revenue, surpassing the earnings in 2019.
Furthermore, Dr Shafeeq requested the restoration of Article 32 (a), (d), and (e) of the Fiscal Responsibility Act, effective from January 1, 2024, as the exceptional circumstances necessitating the measures outlined in Article 36 no longer exist.
According to the Fiscal Responsibility Act, the Maldives Monetary Authority (MMA) borrowing limit is 1% of the average revenue, approximately MVR 220 million. The government must settle such debts to the MMA within 91 days or three months, as stipulated by the Act.