The government’s overdraft has increased to MVR 8.2 billion over the past three years. In 2020, the net claims or overdrafts were reported at MVR 6.1 billion, but this figure escalated to MVR 14.3 billion by October this year.
In response to this rising trend, the government has imposed a cap of MVR 4.4 billion on the amount of money that can be printed from public bank accounts (PBAs). This limit is expected to be lifted by the end of the current year.
The Maldives Monetary Authority (MMA) provided additional data showing that MVR 1.7 billion had been printed as of October last year, following the conversion of the previously printed MVR 6.5 billion into bonds. In the early part of this year, the government printed an additional MVR 4.2 billion, which was also turned into bonds.
Economists warn that printing more money to cover government expenditures could lead to an increase in the amount of money circulating within the economy. This surge in circulation could heighten the demand for foreign currency and negatively impact the exchange rate, potentially destabilizing the economic balance.