Former President Mohamed Nasheed and incumbent President Mohamed Muizzu have voiced their views on the cessation of printing money, or debt monetisation, and its implications on the national economy and currency stability.
Former President Nasheed highlighted the visible positive outcomes of stopping the practice of debt monetisation. He attributed the lowering of the US Dollar exchange rates and the expected slowdown in inflation to this policy decision.
This shift away from printing money, he argued, directly contributed to a decrease in black market exchange rates and a subsequent reduction in consumer prices. Despite the fixed exchange rate set by the Maldives Monetary Authority (MMA) at MVR 15.42 for the US Dollar, real transactions have shifted towards a black market rate ranging between MVR 17 and MVR 17.40 — at times reaching as high as MVR 18.
On the other hand, President Muizzu opposed further debt monetisation as a solution to the country’s economic challenges. Addressing the residents of Kendhoo in Baa Atoll and Meedhoo of Dhaalu Atoll, Muizzu criticised the previous administration’s over-reliance on money printing, a practice he suggested had the potential to lead the nation towards bankruptcy and a devalued Maldivian Rufiyaa.
By putting an end to this practice and focusing on strengthening state-owned enterprises, enhancing corporate governance, and expanding revenue streams, his administration aims to fortify the economy, Muizzu said. The President’s efforts are concentrated on the expansion of tourism, construction, and fisheries sectors, alongside the completion of airport projects.
The controversy surrounding the printing of money dates back to the suspension of specific provisions of the Public Expenditure Accountability Act in April 2020, which allowed the government to exceed its overdraft limit significantly.
This measure, initially introduced as a response to the fiscal strain imposed by the Covid-19 pandemic, has since been adjusted, with the current administration moving to restore the Act and cap money printing, a decision that had been extended annually by Parliament during the Ibrahim Mohamed Solih administration.
The Maldivian Democratic Party (MDP), earlier this month, characterised the decision to stop printing money as one made by the MDP-led Solih administration that came into force during President Muizzu’s term.