Former Finance Minister Ibrahim Ameer has attributed the Maldives’ current financial difficulties to an over-reliance on expected revenues, criticising the government for failing to implement necessary expenditure reductions.
At a press conference held by the Maldivian Democratic Party (MDP) on Sunday, Ameer condemned the government’s approach to managing the nation’s finances, pointing out that without substantial reforms, the situation would continue to worsen. He expressed concern over the government’s spending practices and their potential implications for international financial support.
“The root cause of our financial problems lies in the government’s dependence on anticipated MVR 16 billion,” Ameer stated. “State fiscal policy and financial affairs cannot be shaped based on such assumptions.”
Ameer highlighted the government’s reluctance to cut expenditures or address fiscal imbalances. “International communities are watching how the government handles these issues,” he added.
He further criticised the government’s handling of foreign negotiations, alleging a lack of understanding in diplomatic responses. “The government is reacting based on the feedback it receives during discussions with foreign parties. They do not grasp the nuances of these interactions,” Ameer said.
Additionally, Ameer raised concerns about potential impacts on the Maldives’ credit rating. He warned that credit rating agencies, including Fitch and Moody’s, might soon downgrade the country’s rating due to its financial management practices.
The press conference follows recent developments at the Bank of Maldives (BML), which announced immediate changes to its card limits for foreign transactions. This decision came in response to an increase in foreign currency spending and a shortage of foreign currency sales to the bank. As of Sunday, BML has suspended foreign transaction allowances for debit and credit cards linked to Maldivian rufiyaa (MVR) accounts, and reduced the monthly limit for Standard and Gold credit cards to US$100.
Karl Stumke, CEO and Managing Director of BML, explained that the bank’s foreign currency acquisition is insufficient to meet the high level of card usage. “This year, we have purchased approximately US$60 million in foreign currency from our customers, but card usage is three times higher than that,” Stumke said. “We need to correct this imbalance to ensure adequate support for essential economic activities.”
Stumke emphasised that customers with USD credit or debit cards linked to USD accounts will not be affected by these changes. He also encouraged customers with recurring international payments to set their primary accounts to USD.
