The alleged plan by the central bank to print MVR 2.5 billion is unlawful, and sets a dangerous precedence, says the main opposition Maldivian Democratic Party (MDP).
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, the Maldives Monetary Authority (MMA).
The move has drawn concern from the opposition, including from former President Abdulla Yameen Abdul Gayoom, who alleges that MMA is investing MVR 2.5 billion in the pension fund and then having the Pension Administration Office invest the money in a government bond – something that he warned is the same as money printing.
In a statement on Monday, the MDP called on the government to abandon the plan.
MDP slammed the ruling People’s National Congress (PNC) administration for “incompetence” and “lack of strong policies” – something which the party said has rendered them unable to get the funding it needs from overseas or from the domestic market.
The MDP alleged that with state-owned enterprises and banks tapped to its limits, the administration has now decided to print MVR 2.5 billion through the pension fund.
The party described this as a new method that sets a dangerous precedence, and one that destroys all existing rules and standards for pension fund investment.
The MDP administration had printed MVR 8 billion amid the economic downturn during the Covid-19 pandemic.
In Monday’s statement, the party reiterated their ascertain that they resorted to money printing to cover essentials like food, water, fuel and medicine, because the cease in economic activity after the country’s airports were shut down left them with no other choice.
MDP said that its own decision to draw money had been a responsible one that was made under legal provisions that allowed for it only in natural disasters and severe economic downturns.
The party said that the Covid-19 pandemic fit both criteria.
MDP said that the “sudden” decision to print MVR 2.5 billion goes against the sources of revenue written in the 2025 budget.
The party said that it is also in blatant violation of MMA’s own monetary policy.
“Any move by the central bank to create money for the government through such a transaction is an unlawful act that discards and is in blatant violation of legally mandated rules and regulations. This party will not accept board members of the Maldives Monetary Authority and the Pension Fund Board to participate in and cooperate in such an unlawful act by the government,” said the MDP.
The party warned that such a move would further devalue the Maldivian Rufiyaa against the USD and worsen inflation.
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 money printing as one of his administration’s crowning achievements.