Central bank governor troubled by Maldives vulnerability to external shocks
“Although the growth rate is likely to exceed expectations in the short term, substantial downside risks continue to cloud the medium-term and long-term growth prospects of the Maldivian economy,” Naseer at the annual meeting of the IMF and World Bank in Washington DC.
16 Oct 2017, 9:00 AM
The new governor of the central bank has expressed concern with the Maldives’ vulnerability to external shocks, such as oil price hikes and reduced tourist arrivals, due to a depleted foreign currency reserve.
“Although the growth rate is likely to exceed expectations in the short term, substantial downside risks continue to cloud the medium-term and long-term growth prospects of the Maldivian economy,” Ahmed Naseer said in a statement Friday at the annual meeting of the International Monetary Fund and World Bank in Washington DC.
The trade deficit “deteriorated significantly” in 2016, he explained, due to a surge in imports, higher overseas payments, and a one-off payment of US$271 million to an Indian developer for the cancellation of its contract to develop the main international airport.
As a result, the Maldives Monetary Authority was forced to intervene “to prevent any shocks in the foreign exchange market.” In November 2016, the MMA dipped into the official reserve to buy a US$140 million bond from the state-owned airport company to help compensate GMR.
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