MMA deputy governor faces dismissal as money printing controversy escalates

The ruling party majority moved to remove the Maldives Monetary Authority’s deputy governor on Tuesday as a second member of the central bank’s board of directors resigned.

The departure of Shuhad Ibrahim, the economic development ministry’s representative on the seven-member board, followed the resignation of Ahmed Zayan Mohamed, the finance ministry’s representative and chief economist, earlier in the week.  

The turmoil within the central bank comes after the government allegedly forced the board to approve money printing under the guise of a real estate transaction. 

Neither the MMA nor the government has denied a plan to purchase a 22-hectare plot of land from Hulhumalé for up to MVR 15 billion (US$ 972 million), a deal that according to the opposition is intended to covertly raise finances as a large portion of the proceeds would be used to buy treasury bills. 

The land purchase would devalue the currency and bring the economy to the brink of collapse, the Maldivian Democratic Party warned. A massive spike in the supply of Maldivian Rufiyaa would result in high inflation, jeopardise the fixed exchange rate and potentially trigger a balance of payments crisis, the former finance minister told the press on Monday. 

The resignation of MMA board member Shuhad emerged on the following day. According to Dhauru, he resigned after the governor refused to review the land purchase decision. The proposed review had been backed by Shuhad and Zayan as well as Deputy Governor Ahmed Imad, Adhadhu reported.  

On Tuesday, parliament’s public accounts committee decided to recommend Imad’s dismissal. A motion was passed to call a no-confidence vote on the Majlis floor. The grounds for dismissal was Imad’s share of blame in former governor Ali Hashim’s alleged dereliction of duty.   

Speaking at the committee, Deputy Speaker Ahmed Nazim strongly denied that billions of Rufiyaa would be injected into circulation, echoing remarks by other senior ruling party lawmakers.

“MMA is by nature a bank, so they can acquire assets; and buying assets, buying land in a manner that benefits them commercially – that’s something we should leave up to them,” he suggested. 

Nazim questioned the resignation of MMA board members. “There’s no point in resigning after deciding to do it. Where’s the integrity then?” he asked, referring to Shuhad reportedly voting in favour of the real estate transaction before seeking a review. 

He accused the opposition of seeking to incite panic with “blatantly false” claims of the central bank printing MVR 14 billion or MVR 20 billion. “This government won’t do it that irresponsibly, I’m certain they won’t do it,” he said. 

The government recently repaid a US$ 100 million loan taken by the MDP government at a high interest rate, which has created fiscal space and borrowing capacity, Nazim contended, assuring that the government would not inject “money into the system” beyond MVR 2.5 billion.  

“The reason is that a target of reducing the deficit to MVR 9 billion or so had been shared with us within the medium-term policy. So if Rufiyaa is injected into the economy that way, that target won’t be achieved. The government won’t release those billions in a way that the target won’t be achieved,” Nazim said.

The MMA has government debt that dates back to the 2004 tsunami, he continued: “If the government earns an income, the government would first settle that debt. That money won’t be released into circulation!”