Local business tycoon, media owner, MP, Jumhoree Party (JP) leader and member of the Judicial Services Commission (JSC), Gasim Ibrahim, has warned that the dollar exchange rate of the Maldivian rufiya may rise to MVR 20 by the end of the year – a 25 percent increase.
Speaking at a press conference on Sunday, Gasim told local media that the main reason for the Maldivian currency to go down was “selling Ibrahim Nasir International Airport to GMR, selling the shares of Dhiraagu, and the Maldives Water and Sewerage Company.’’
Gasim claimed the three companies were now taking US$2 billion dollars out of the country annually.
At the press conference, Gasim – who also operates domestic airline Villa Air, under the FlyMe brand – alleged the former government had not awarded the airport to GMR in a way that would benefit the citizens, and expressed concern over increased fuel prices and landing fees.
Gasim’s comments follow GMR’s suspension of Villa Air’s credit facility due to unpaid bills of MVR 17 million (US$1.1 million) for fuel, ground handling and passenger service fees, according to local media reports on Saturday.
His concern over currency devaluation follows the former government’s managed float of the rufiya within a 20 percent band of the pegged rate of MVR 12.85.
In April last year, then-Finance Minister Ahmed Inaz explained that the government decided to change the fixed exchange rate to a “managed float” to shape government policy towards increasing the value of the rufiya and ultimately bring the exchange rate down to MVR 10 – an oft-repeated pledge of former President Mohamed Nasheed.
The worsening balance of payments deficit could not be plugged without allowing the market to set the exchange rate, Inaz continued, adding that through lowering the fiscal deficit and spurring private sector job growth “a path would open up for us to reach the lower band (MVR 10.28).”
“My estimate is that it will take about three months for the market to stabilise and reach a balanced [exchange] rate,” he said.
Following this decision of the former government the then opposition Dhivehi Rayyithunge Party (DRP), which has since divided into two factions, held protests in the streets of Male’ against the decision.
The International Monetary Fund (IMF) however praised the Maldives’ decision to effectively devalue its currency as a “bold step by the authorities [representing] an important move toward restoring external sustainability.”
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