Small banking sector cause of low foreign currency reserve: Munawwar

Maldives needs to expand its banking sector and introduce benefits in order to maintain foreign currency in the country, said former Finance Minister and Maldives Monetary Authority (MMA)'s new Governor nominee Ahmed Munawwar today.

Following former Governor Ali Hashim's dismissal from the position last week, President Dr Mohamed Muizzu nominated Munawwar for the post and forwarded his name to the Parliament for approval.

During the Public Accounts Committee meeting of the Parliament today, the committee members interviewed Munawwar, who also currently serves as advisor to the Minister of Finance.

Answering a question by a member of the committee, Munawwar said that local banks need to be able to issue enough funds to develop a resort. He said that this is currently not possible because the country's banking sector lacks the capacity to do so.

He further said that there is also a lack of observing economic measures along with structural issues in the foreign exchange market. The foreign exchange issues cannot be resolved unless these rules are restored, he said.

Munawwar went on to say that while Maldives is dependent on tourism sector investments, any changes brought should follow consultation with stakeholders from the sector.

"I don't believe in implementing very strict regulations. Instead, it is important to incentivise or provide additional benefits for investors to make them more interested," said Munawwar.

He added that investors would also prefer to keep funds in local banks if they are able to provide a satisfactory service to the investors.

"Truthfully, our banking system does not have the funds to built a resort even, not even one resort," he said.

He went on to say that the assets of Maldives' banking sector adds up to USD 6 billion and that about USD 4 billion enters the tourism sector each year, which means that these figures do not make sense.

According to Munawwar, instead of forcing businesses to keep funds in local banks, the banking sector needs to increase benefits offered to such parties.

He also pointed out that an unnecessary amount of money was printed during the past five years, due to which about MVR 8 billion is circulating within the system. However, the issue is now resolved, he said.