Maldives Monetary Authority (MMA) has restricted the government’s overdraft limit to MVR 2 billion.
Despite the central bank’s imposed limitation on currency printing, it has already printed MVR 4.2 billion in 2023, which has been exchanged for a long-term bond.
The main aim for MMA’s currency printing efforts is to manage state expenditure.
Maldives government allocated a state budget of MVR 42 billion for 2023 fiscal year, the highest ever by any government in the country so far.
According to Ministry of Finance, government’s outstanding debt to MMA in long-term bonds is at MVR 12.5 billion.
MMA imposed the recent limit after it already exchanged the previously printed currency this year, into a bond. Before this, the government had set a printing limit of MVR 4.4 billion from the Public Bank Account (PBA), which the Maldives parliament has approved as the overdraft limit until the end of 2023.
Although a limitation was imposed, with the already printed MVR 4.2 billion, the central bank is expected to print an additional MVR 6.2 billion during the current year.
As of June 2023, the government is still overdrawing money through the central bank which had printed MVR 480 million while in the preceding month it printed MVR 1.6 billion.
Earlier, the International Monetary Fund (IMF) advised a surge in currency printing will adversely impact the Maldives currency exchange since it reduces demand for foreign currency. The international body’s warning came after the government announced its state budget for 2023.