The Ministry of Finance said that the cessation of state budget would not impact cashflow of the government, if it has regular access to loan facilities and generate projected revenue as per the state budget for 2024.
The current administration led by President Dr. Mohamed Muizzu has terminated the process of printing money, or otherwise known as the overdraft from public bank accounts. The practice commenced earlier in Covid-19 pandemic to adjust for depleting state cashflow and its management amid the crisis.
Government’s overdraft for the past three years have reached MVR 8.2 billion, with majority of this directed towards cashflow management. Statistics of the Maldives Monetary Authority (MMA), confirms the figure as well.
In response to media queries on whether the government’s decision to stop the overdraft facility, the Chief Financial Budget Executive of the Ministry of Finance, Ahmed Saruvash Adam said that the facility can no longer be utilized towards cashflow management as it has already hit the MVR 2 billion ceiling.
“Since it’s a deficit budget, the budget is arranged by acquiring debt, and if we receive debt inflows and revenues, cashflow management would not be challenged,” Saruvash commented.
The parliament approved MVR 49.8 billion as the 2024 state budget, which was arrived with an inclusion of MVR 300 million atop the originally proposed figure by the state. With this, the state’s annual revenue is projected at MVR 33.5 billion, while the budget would face an expected MVR 16.3 billion deficit.
To address this deficit, the state would acquire MVR 10.4 billion in external debt, with the rest raised as internal debt.
The government earlier set a maximum overdraft facility of MVR 4.4 billion from the Public Bank Account (PBA) since 2020, and the limit was extended until 2022 by the parliament.
The current administration however announced it was no longer desired with continuing the practice, and brought it to cessation effective 2024.
