The Maldivian government hopes to finalise an agreement with Sri Lanka to establish a credit line worth US$200 million, President Mohamed Nasheed told press today prior to departing for Sri Lanka to attend the swearing-in ceremony of President Mahinda Rajapaksa.
As preliminary discussions for the credit line has been ongoing for some time, the President said that he hoped an agreement would be signed in the near future between the Maldives Monetary Authority (MMA) and the Sri Lankan Central Bank.
“Our aim is not really to use that money for anything,” he explained. “Our aim is to set up a mechanism for Sri Lankan currency to be available for purchase in the Maldives and for Maldivian currency to be available for purchase in Sri Lanka. To set up that mechanism, first of all a framework agreement has to be established. God willing, these discussions will reach a conclusion during this trip.”
He added that the government’s objective was to enable Maldivians to purchase Sri Lankan rupees with Maldivian rufiyaa for imports as well as making Maldivian rufiyaa available to Sri Lankans who wish to buy Maldivian goods.
The mechanism would improve the country’s balance of payments, broaden business opportunities and alleviate the high demand for US dollars in the country, he said.
While Sri Lankans would spend more on Maldivian products as a result of the agreement, local demand for US dollars would “decline significantly” when Maldivians are able to spend “their own currency in Sri Lanka”.
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Sounds good. But the sad thing is we cant trust our leadership. The government has been ruthless and untrustworthy - I mean the nonstop lies from President Nasheed; the overt threats against those who oppose him, the way he tried to sack over 20000 civil servants who were the bread winners for one third of the country's population; the manner in which he signed away the airport to GMR by firing the chairman of the Board of Directors of the Airport company and replacing him with an inlaw of the first lady; the haste in which IGMH was given to Apollo and his effort to back away from it now; the list goes on. So I wont raise my hopes until the nitty-gritty of the matter is revealed.
This government will fail, no matter what!
Even if they establish a credit line worth US$1 trillion with other countries, they will see no results.
Why? Because the foundation is crooked!
MDP came to power with false promises; remember mid-term?
MDP = Most Disgusting Party.
A very smart move from Maldivian president. He wants to keep his US dollars intact. This is simply exchanging of goods between two countries without paying to a currency of a third party. This is what both countries had in the ancient times.
FORMER DICTATOR RULE OVER 30 YEARS MALDIVES AND DID ALL NECESSARY THINGS AGAISNT HUMANITY. AFTER 30 YEARS CURRENT PRESIDENT TOOK OFFICE AND HOW COME YOU ALL HOPING TO SOLVE OR RELEASE THEIR PROMISES WITHING FEW MONTHS OR YEARS? ITS UNFAIR AND ALREADY DONE LOTS OF DAMAGE BY GAYOOM AND HIS ADIMINISTRATION TO THE COUNTRY. WAIT DONT BE HURRY TO DO THE PROMISES BY MR. NAUSHAD. YOU ALL JUST TALKING FOR NOTHING.
great news. hope it will work. even do this in india and thailand. and dollar demand will go down dramtically
Sounds great, now we won't have to rush around trying to get hold of dollars every time we go to Sri Lankan.
Maldivians spend a lot of dollars in Sri Lanka and this way it could help alleviate the dollar shortage problem also.
Oh great! Talk about blind leading the blind.
Would be good if something similar can be worked out with India, Malaysia, Bangladesh etc maybe!!! Hope the Government is thinking of all the expats who work here too and are having a very difficult time
oops!bye bye independence of Maldives!
it's all the way to be a slave of IMF!
soon here will be nothing /
It would have been better if the President explained the rationale for the $200 million credit line, if he's not going to touch it.
From what I can see, there is clearly a huge trade inbalance between the two countries. We import a lot more from Sri Lanka and spend in Sri Lanka than what we export to them and what they spend here.
So, the $200 million looks like collateral for the inevitable surplus Rufiyaa circulation in Sri Lanka. The Sri Lankans MAY have to convert their Rufiyaa to dollars and the Maldivian government will have to foot the bill to the tune of a potential $200 million.
huh??
Blood donation from an AIDS +???
1. This would encourage Maldivains excessively consuming Sri Lankan goods - worsening the budget and deficit situation
2. Dollar crisis would worsen - Sri Lankans would use their rupees to buy all the hard currencies in maldives.
3. Lost of monetary independence.. like to become like Nepal/Bhutan.
Hope some one convinces me I am wrong.
Interesting to read neg comments as usual from the people who spent it all under the dictator, forget them, they live in the past. Anything to alleviate the balance of payments and dollar demand is worth looking at.
Most well established economies trade with their neighbors in this way, SL is the obvious choice, they're close and staples are plentiful so why not improve trade links?
As for people downplaying all the time, wake up and smell the bankrupcy it's yours after all! We need a Parliament to work for the country, get on with it or step down, represent your constituents, not your old corrupt masters.
Ahmed Ibn Addu is spot on. The same thing has been running thru my mind as well. There is going to be a huge imbalance. The remitences of sri lankan expats here plus maldivians goin to sri lanka for medical and business would surely be a significant amount of Rf inflow to lanka. But just how much demand would there be for Rf in Sri lanka?
Hope someone more thorough in international finance can shed more light on this. Minivannews should also bring independent opinions from financial analysts when bringing such articles.
@mango mango
i think we already are a slave of IMF and other money laundering bodies whos policies are to make the countries slaves of the money.
The simpple fact, we have built a country without a physical domestic production except few tonns of fish that is being processed here.(which apprantly is in danger of going out of stock unless measures are taken to manage the stocks intelligently), but as we all know, thats not a goal of moneytary system.
And further we have build a society without any scientific knowledge of how things really work. we have few engineers, few research scientist and we have a lack of natural resources.. this couldn't get any bleaker when we are faced with bankrupcy of western and eastern countries..
we survive on tourism money and virtually importing all the goods.even the toothpick is imported for heavens sake...
+ agree with Ali-Qatar
@Ahmed - From your effort to downplay negative comments and advice to sweep such comments under the carpet makes me think that you are one of those who worked for the dictator and changed sides when the government changed. Don't forget that those who worked for the dictator such as Zaki, Shaheed and Maria are working today for the present dictator. No one questions the importance of looking for ways to alleviate BOP problems and foreign currency shortages. But there is a limit to the back peddling our ministers and nation can do to survive President Nasheed's blunders. This looks like another such blunder without proper studies. I bet our central bank knows nothing about this decision until it was announced.
I live in Sri Lanka and sometimes need to transfer money from BML to banks here.
I was wondering if this would make it possible for BML to allow us to transfer or withdraw more than the equivalent of USD 200.00 per day.
I would appreaciate some more info.
Thank you.
This is a good move. We can never satisfy Gayoom and his cronies. All they want is to get back to power. We got a bankrupted country with 5 weeks of reserves. We cannot do the best of things when the coffers are empty. By putting. Gayoom back they are not going to fill up.
@Salley, you could not be more wrong about my politics my friend. I have never worked for any dictator, nor would I. As for sweeping under the carpet, I am as fed up as you sound of the burgeoning debt arising from the plague of the ever growing state minister pile.
I was actually trying to advocate parliament and govt working together for a change, before we disappear in a wave of debt as well as apathy.
So no the only side I would like to be on is the 350,000 of us being led astray by gutter politics.
Ok. Lets see. Dollar rate in male =13.50 or 14
×thinks×..transfer money to a srilankan account..buy sl rupees..change dollars..take Thai airways to Bangkok..bingo..
Wait..would they allow us to suck their dollar..hmmm..i wouldn't if i was rajapakse..btw i don't think its going to work
Its worth a shot. If the Sri Lankan side would accept SL Rupees in place for USD for transfers made by SL workers here. What we really need is a proactive MMA.
its not new for maldivian gonverment.........