The Maldives Monetary Authority (MMA)’s move to invest MVR 2.5 billion in the pension fund and then have the Pension Administration Office invest the money in a government bond will have the same economic implications as money printing, says former Maldivian President Dr. Mohamed Muizzu.
Last week, the board of the Pension Administration Office approved a decision to sell a government bond in the secondary market in collaboration with the central bank – a move that has drawn concern from the opposition.
But government officials from various ranks have been insisting that it is not the same as money printing.
While the Finance Ministry has declined to provide an official comment, Sun was able to confirm through credible sources that such a plan is in motion.
During a townhall meeting on Sunday night by Yameen’s People’s National Front (PNF), the former Maldivian leader noted that President Dr. Mohamed Muizzu and Economic Minister Mohamed Saeed had been among the most vocal critics of the move by former President Ibrahim Mohamed Solih’s administration to print MVR 8 billion amid the economic downturn during the Covid-19 pandemic.
“Yes. But has the incumbent administration done anything to correct this assuming office? No. They are making it worse,” said Yameen.
Yameen alleged that the MMA using money in the state reserves to purchase a fiscal tool of the Pension Administration Office, and not money that is already in circulation.
“This money [that is out of circulation] will not raise inflation. It will not further increase the value of the US dollar against the Maldivian Rufiyaa. Because this money is not tangible,” he said.
Finance Minister Moosa Zameer accompanies President Dr Mohamed Muizzu to participate in the 4th International Conference on Small Island Developing States at Antigua and Barbuda, May 25, 2024. (Photo/President's Office)
Yameen warned that releasing this money into circulation will have the same effect on the economy as printing new banknotes and releasing it into the economy.
“This money is going towards serving a need of the Ministry of Finance or the government. We are talking about two billion. It will have the same effect as printing money. But, yes, that’s true. They haven’t brought in physically printed banknotes yesterday or some other day,” said Yameen, who received his higher education in economics.
Yameen alleges that once the MMA invests the money in the pension fund, the Pension Administration Office is going to invest it in a government bond.
Former Finance Minister Ibrahim Ameer has also said that the transaction is the same as money printing, warning that it also goes against the Fiscal Responsibility Act.
MMA was hit with similar allegations back in March, when it was accused of attempting to inject around MVR 15 million through the purchase of land in Hulhumale’ – a move that critics warned constituted to money printing.
But the transaction was later tabled after issue gained public attention.
It also led to a shakeup within the MMA’s board, marked by several resignations.
The MDP administration had printed MVR 8 billion amid the economic downturn during the Covid-19 pandemic. The former administration claims it resorted to printing money because it was left with no other choice to a complete cease in economic activity after the country’s airports were shut down.
But the move was widely slammed by the ruling People's National Congress (PNC) back when it was in the opposition.
During his 2023 presidential campaign, President Dr. Mohamed Muizzu vowed he would never print money, as his predecessor had resorted to during the Covid-19 pandemic. He repeatedly reiterated this pledge after taking office, naming avoiding printing money as one of his administration’s crowning achievements.