The Maldives Monetary Authority (MMA) has imposed a restriction on the government's overdraft, capping it at MVR 2 billion.
Despite the central bank's imposed limitation on currency printing, it has already printed MVR 4.2 billion in 2023, which was then exchanged for a long-term bond.
The primary focus of the central bank's currency printing efforts is to manage state expenditure. As a result, the government has allocated a state budget of MVR 42 billion for this year, the highest budget allocated by any government in the Maldives thus far.
According to statistics from the Ministry of Finance, the government's outstanding debt to the Maldives Monetary Authority (MMA) in the form of long-term bonds amounts to MVR 12.5 billion.
It has been revealed that the Maldives Monetary Authority (MMA) imposed the limitation on the state overdraft to MVR 2 billion after it had already exchanged the printed currency for 2023 into a bond. Prior to this, the Maldives government had set a printing limit of MVR 4.4 billion from the Public Bank Account (PBA). The Maldives parliament has subsequently approved this amount as the overdraft limit until the end of 2023.
Despite the existing overdraft limitations, considering the MVR 4.2 billion that has already been printed and exchanged for a bond, it is anticipated that the central bank might proceed to print an additional MVR 6.2 billion during the 2023 fiscal year.
Meanwhile, the Ministry of Finance was not available for a comment on the matter.
As of June 2023, it has been reported that the state is still overdrawing money through the Maldives Monetary Authority (MMA). In June, the central bank printed MVR 480 million, while in the preceding month (May 2023), it printed MVR 1.6 billion.
Earlier, MMA had advised that the surge in currency printing will adversely impact Maldives currency exchange as it reduces the demand for foreign currency. IMF’s warning came in relation to the 2023 State Budget.
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