The sudden decision to tighten access to the dollar by BML will put already stressed households and businesses under further pressure. Students, SMEs and families rely on these limits for essentials and sudden decisions deepens difficulties and uncertainties.
The many and sudden policy shifts to foreign exchange access has shown a failure to grasp the situation and compliant institutions with weak leadership has only made things worse.
These poorly thought out decisions hurt ordinary people and damage the broader economy. We don't need short term fixes and patchwork decisions to cover up gross incompetence. We need a prompt careful recalibration not these reactive adjustments. The BML needs to stop being the purse and lapdog of the Muizzu government and put in immediate steps to stop the slide down the slippery slope and take measures to safeguard the hard earned deposits of the people.
What makes the current mismanaged debt crisis more troubling is that the government inherited a recovering economy, rising revenues, and strong tourism growth, a time when debt should have been coming down. During our term, we were hit with an unexpected and severe global crisis. Tourism collapsed and government revenue evaporated overnight. The MDP government had no choice but to borrow during the covid period to plug a MVR 25 billion+ loss in state revenue.
We presented credible fiscal consolidation strategies and economic revival plans to external investors. We kept state payrolls, the welfare system, and the economy running. We supported furloughed private sector employees, the self-employed, and helped keep businesses, small and large, afloat. While I firmly believe state borrowing should generally be limited to productive investments, the outcome speaks for itself. An economy over 65 percent dependent on tourism survived one of the worst global crises in modern history. If there is one regret, it is that we could not do even more for our people.
Compare that to this government. Debt today is being used to satisfy political whims, from military drones to an ever expanding list of political appointees. Despite the scale of spending, many islands have seen little real economic benefit, service improvements, or projects that directly support livelihoods. The enitre SME sector is crumbling. It will take decades for this backbone of our economy to be rebuilt.
The public and businesses deserves clear answers on the status of debt refinancing, and whether it is true that double-digit interest borrowing is now being pursued, making repayment even harder in the years ahead.
The Maldivian population deserves to know if we are sliding down a path towards an imminent economic collapse or a safe harbour and prosperity. The deafening silence by the government and realities on the ground points to harder times.
In less than three months, this April, a USD 500 million sovereign Sukuk falls due, a major external obligation that any serious government would have planned for well in advance. Refinancing sovereign debt is not unusual. It is a standard and prudent tool used by governments to manage large payments and protect foreign reserves. In 2021, the MDP government successfully refinanced the previous administration’s USD bond through the Maldives’ first international Islamic Sukuk. That transaction brought stability, safeguarded reserves, and maintained investor confidence following an unprecedented global crisis.
This government came to power loudly attacking COVID era debt, yet after more than 2 years in office, has delivered neither fiscal reform nor a credible plan for the Sukuk it always knew was coming. Instead, we are now witnessing complete silence. Does the government have a plan? Are they worried about it? or they are so confident that they are not bothered to be transparent?. Or is it going to be a dangerous scramble? leading to possible partial repayment that undermines confidence, rushed private borrowing at opaque terms, and heavy depletion of international reserves and the Sovereign Development Fund just to get through April, leaving the country short of foreign currency, with almost no buffer to absorb shocks and pushing us into a position we never should have reached. More worrisome, however is the possibility of threats to our sovereignty as may be suggested from rumours of land sales to foreign countries.
This is not debt management by any means, but a clear absence of planning.
Congratulations to all the winners of the Sports Awards 👏👏👏👏👏 especially to all the promising sportswomen who I hope will continue to shine in the International world, as Maldivian athletes!
Beautiful event minister @AhmedMahloof 👍