Economy requires structural changes to address foreign currency crisis, Finance Minister tells parliament

Finance Minister Ahmed Inaz has told parliament that addressing the foreign currency crisis will require structural changes to the economy.

Increasing revenue and reducing expenditure to address the deficit – a legacy of years of printing money and high state expenditure relative to income – was the main solution, he said, as was strengthening regulations and enforcing the use of rufiya as a legal tender, “with no exception.”

The country’s lucrative tourism industry currently charges visitors in US dollars rather than the local rufiya currency, while the central bank’s regulation enforcing the use of legal tender has historically been routinely ignored and rarely enforced.

The rufiya was identified this week by financial news agency Bloomberg as the world’s second worst performing currency after the Suriname dollar,

“The Maldives was caught by the news,” Inaz noted to Minivan News. “It’s unlikely they would have any data on the rufiya before [the devaluation] on April 10.”

The state received US$16 in January, US$19 million in February, US$29 million in March, US$15 million in April and US$23 million in May – a total of US$115 million for the year so far, Inaz told parliament.

The government has indicated to the International Monetary Fund (IMF) that it intends to pass a raft of new taxation and economic reforms through parliament to modernise the economy, and a package of bills has been submitted by the government.

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