Maldives Monetary Authority Deputy Governor Ahmed Imad resigned from the central bank on Monday citing recent decisions that “do not align with the institution’s core objectives.”

The resignation came after parliament moved to dismiss him last week amid allegations of the government forcing the MMA’s board to approve printing money in the guise of an MVR 15 billion (US$ 972 million) real estate transaction with the state-owned Housing Development Corporation. 

The central bank’s land purchase was to be used “as a cover to raise money from the domestic market” after the government failed to finance deficit spending and manage cashflow for budget expenditures, according to the opposition, which warned that the scheme could bring the economy to the brink of collapse. 

“In light of current economic conditions, further monetary financing could have serious macroeconomic implications, leading to exchange rate and inflationary measures, and jeopardise the MMA’s monetary policy objectives and independence,” Imad said in a resignation statement, echoing concerns over currency devaluation and economic instability as a consequence of injecting billions of Rufiyaa into circulation.   

Highlighting persistent challenges posed by "significant external debt weighing on macroeconomic stability" and risks facing the financial sector from a "high bank-sovereign nexus," Imad urged the central bank to take action to "reduce the banking sector's exposure to the government."

"In addition, a tight monetary stance remains necessary to defend the exchange rate peg [of MVR 15.42 to US$ 1], and fiscal consolidation is critical for avoiding monetary financing and achieving long-term stability,"  he added.

"I urge the administration to prioritise fiscal discipline,  safeguard the MMA's autonomy, and implement prudent measures to ensure macroeconomic stability." 

Last week, former governor Ali Hashim told the Maldives Independent that high inflation would be “unavoidable” with a massive increase in the money supply. “This is a drastic move, the last card in one sense, to raise money,” he said.

But Deputy Speaker Ahmed Nazim disputed the MVR 15 billion figure and assured that “no injections will be made without creating the fiscal space, fiscal space that will be created by paying off internal and external debt.”

Imad became the third member of the MMA’s seven-member board of directors to resign over the money printing scheme. Shuhad Ibrahim, the economic development ministry’s representative, resigned after the governor refused to review the land purchase decision as proposed by Deputy Governor Imad and Ahmed Zayan Mohamed, the finance ministry’s representative and chief economist, who also submitted his resignation last week.  

According to Adhadhu, Imad was barred from accessing the central bank’s internal systems after he opposed the real estate deal. Access has also been restricted to several other staff amid an investigation to identify the source of leaks, Dhauru reported. 

At Monday’s sitting of parliament, MP Ahmed Azaan from the ruling party cautioned that perceived interference in independent institutions such as the central bank and the Supreme Court could hinder efforts to service substantial upcoming debt obligations. 

“This is a juncture where the Maldives is very much in need of foreign assistance, a juncture where we are in need of assistance from foreign countries and foreign financial institutions. We need to pay US$ 1 billion next year,” the ostracised MP for Central Hithadhoo explained. 

Credit ratings agencies will consider judicial independence and whether “state institutions such as the MMA functions independently,” he continued. “If we are to rush like this and meddle with the judiciary and MMA and other places, when they give the next rating, they will give the D rating to the Maldives. If they do that, we will face very serious challenges,” he said, referring to Fitch and Moody’s downgrading the Maldives to “junk” status last year over the risk of defaulting on debt.