Treasury bills and bonds rise to MVR17.6 billion, MMA reveals

The Maldives Monetary Authority (MMA) has revealed that the outstanding payments for treasury bills and bonds had risen to MVR17.6 billion at the end of 2014.

According to the Monthly Economic Review of December 2014, published yesterday (February 3), stocks of government securities comprising T- bills and T-bonds increased 22 percent and 55 percent, respectively, comparing monthly and yearly terms.

“As for the outstanding amount of T-bonds, it increased significantly in both monthly and annual terms and reached MVR6.4 billion compared to MVR3.1 billion recorded in November 2014,” the review stated.

The MMA’s economic review revealed that 103,744 tourists arrived in the Maldives in December 2014, which is 1 percent lower than the arrivals of the same period in 2013, due to the “decline in arrivals from Asia and Europe”, but an increase of 16 percent compared to November 2014.

Among Asian countries, China contributed the most tourists, with 363,000 of the 1.2 million visitors in 2014 – a year-on-year rise of 9.6 percent.

It was also noted that the occupancy rate of the Maldivian tourism industry as a whole decreased by two percent, from 76 percent in December 2013  to 74 percent in December 2014 due to the decrease in total bed nights by 3 percent, and the average duration of stay to 6 days.

Comparison of figures from November and December of 2014 suggest that there was a 12 percent increase in international reserves and a 17 percent increase in state revenue, leaving international reserves at US$614.7 million by the end of last year.

Reserves held at the end of November equated to 3.3 months of imports, compared to 2.3 months recorded at the end of November 2013, said the MMA.

“The increase in total revenue during December 2014 was largely due to a 32% growth in tax revenue (mainly contributed by the increase in T-GST receipts),” stated the monthly review.

Trade balance worsened by 42 percent in December 2014 compared to corresponding the same period in 2013, as imports rose by 34 percent while exports only increased by 11 percent.

“The growth in imports was mainly due to the increase in imports of transport equipment, while the growth in exports can be attributed to the rise in re-exports”.

According to a statement from Maldives Customs Services on January 14, imported goods in 2014 amounted to MVR30.7 billion – a 22 percent increase compared to 2013.

Customs figures also showed that the decline in exports saw the total value of goods leaving the Maldives in 2014 valued at MVR2.24 billion, compared with MVR2.56 billion in 2013.


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MMA announces finalists in new rufiyya note design competition

The Maldives Monetary Authority (MMA) has announced the three proposals shortlisted for the competition to design the new Maldivian currency notes.

The shortlisted proposals were presented by Abdulla Nashath, Afzal Shafium, and the team of Mohamed Rassam, Hussein Shihab, and Ali Nishaf Rasheed. These three parties will present their designs on February 25.

Proposals for the new notes to be released on the occasion of the 50th anniversary of Maldivian independence were evaluated by an advisory committee of 13 members comprising of representatives from various technical fields including history, art, language, and economics.

The MMA board of directors will make the final decision on which designs will be printed after considering the evaluation of the advisory committee.

After initially inviting designs for notes in September, the MMA extended the November 30 deadline for one month after concluding that the 60 submitted designs were all unsuitable for bank notes.


Guest house inspector scheme launched

The Ministry of Tourism has today commenced a programme to train guest house inspectors.

The workshop was held at the National Centre for the Information Technology (NCIT), with 20 participants from 17 islands taking part as the first batch of inspectors to be trained under the scheme.

Deputy Minister of Tourism Hussain Lirar told Minivan News that the participants – selected from names forwarded by island councils – will assist the ministry’s inspectors in ensuring that guest houses maintain professional standards after the initial licenses are granted.

Speaking at the opening ceremony of the workshop, the tourism ministry’s Director General Aishath Ali stressed the importance of maintaining standards in the country’s guest houses, reported Haveeru.

Ali said it was important to ensure that all visitors and guests left the Maldives with the intention of returning.

After having just 22 registered guest houses in 2009, over 200 guest houses are now registered with the tourism ministry – with a capacity of over 2,000 beds.

According to the Maldives Monetary Authority, quarter three of 2014 saw the average operational bed capacity increase by 4 percent when compared to the same period in 2013.


GDP to increase from 8.5 to 10.5 percent in 2015, says MMA

Growth in the tourism and construction industry is expected to push GDP to 10.5 percent in 2015, up from 8.5 percent in 2014, reports the Maldives Monetary Authority (MMA).

The authority’s Monthly Economic Review for December showed that tourist arrivals for the month of November stood at 89,778 – a decline of 5 percent compared to same point in 2014, and 19 percent compared to the previous month.

“The monthly and annual decrease in arrivals was largely contributed by the decline in arrivals from Asia and Europe”, reported the MMA.

Furthermore, the review also stated that although fish purchases increased 14 percent from September, they fell to 4003.4 metric tonnes in November – registering a decline of 50 percent. The review also reported an 11 percent decline in fish export revenue in November, compared to the same month in 2013.

“The growth in fish volume exports can be attributed to the increase in volume of frozen yellowfin tuna exports,” explained the MMA. “As for the decline in fish export earnings, this was mainly due to the fall in export earnings from frozen skipjack tuna”.

Meanwhile, the figures revealed that the inflation rate dropped from 2.1 percent in October to 1.1 percent in November due to the slow pace at which transport and food prices rose.

The total monthly state revenue grew by 9 percent in September, amounting to MVR1 billion (US$64.9 million), with a decrease in expenditure of 2 percent. The surge in revenue for this period resulted from a “13% growth in tax revenue and a 25% increase in non-tax revenue” while the decrease in expenditure resulted from the 2 percent fall in recurrent expenditure, according to the review.

However, the MMA note that the balance of payments had worsened by 13 percent in October compared to the corresponding month in the previous year due to a 3 percent increase in imports accompanied by a 37 percent decline in exports.

Gross international reserves were reported to have fallen by 1 percent to US$547 million by the end of November – equal to 3.3 months’ worth of imports.


MMA denies US suggestion it has knowledge of terrorist funding

The Maldives Monetary Authority (MMA) has rejected claims by the US State Department that it has any knowledge of funds being used to finance terrorist activities abroad (May 11).

The MMA’s statement came in response to a report from the US government that the authority believed funds from the Maldives were being used to sponsor terrorist activities.

“The MMA has neither received nor communicated any information regarding confirmed operation of terrorist financing activities,” said the MMA.

The US Country Reports on Terrorism 2013 claimed that criminal proceeds were coming from hawala systems (informal money transfer networks) to transfer money between islands.

“Maldivian authorities believe that funds are currently being raised in Maldives to support terrorism abroad; however, there is no reliable information regarding the amounts involved,” read the US report.

“While no official studies yet have been conducted, the Maldivian Central Bank believes that criminal proceeds mainly come from domestic sources, as a large percentage of Suspicious Transaction Reports (STRs) are related to Maldivians,” it continued.

The Maldivian Democratic Party (MDP) has today cited the US report as evidence that the government is not doing enough to combat terrorism.

“The Maldivian Democratic Party strongly condemns the government’s failure to bring an end to terrorist and extremist activities as funds are raised in the Maldives to fund terrorism abroad,” read a press release today.

The party suggested that examples of Maldivians engaging in extremism and terrorism was on the rise, suggesting the government was not doing enough to resolve organised criminal activity in the country.

In response to the US report, the MMA has contended they have not received any confirmed suspicious transaction reports related to terrorist financing in the Maldives through formal or informal money transfer networks.

The authority also expressed confidence in the industry’s framework for preventing such operations, adding that any companies that are under their supervision are subject to the Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) obligations.

AML/CFT legislation drafted by the MMA was passed by the People’s Majlis last month and ratified by President Abdulla Yameen on April 13.

The new law introduced rules governing financial transactions and the inflow and outflow of money from the Maldives.

“We are pleased to note that most of these financial institutions have internal policies, procedures and programs to implement those obligations,” the MMA statement added.

The US State Department had further noted growing concern since 2010 “about the activities of a small number of local violent extremists involved with transnational terrorist groups”.

“There has been particular concern that young Maldivians, including those within the penal system, may be at risk of becoming radicalized and joining violent Islamist extremist groups. Links have been made between Maldivians and violent extremists throughout the world,” the report stated.

The department also suggested that the Maldives has few laws which effectively control the movement of people and money into and out of the country, adding that due to its “sprawling island geography and insufficient technological capabilities” the coastguard could not effectively patrol the territory.


President replaces two members on MMA board of directors

President Abdulla Yameen has on Monday replaced two members on the board of directors of the Maldives Monetary Authority (MMA).

The representative of the Finance Ministry – the ministry’s permanent secretary – has been replaced with State Minister for Finance and Treasury Ahmed Munavvar.

Additionally, the private sector representative has also been changed. The seat formerly filled by Damas Company owner Mohamed Solih has been replaced with Inner Maldives Deputy Managing Director Abdulla Giyas Riyaz.

The remaining four positions on the board are filled by Deputy Governer Aishath Zahira, Assistant Governer Dr Azeema Adam, Minister of Youth and Sports Mohamed Maleeh Jamaal and former Minister Hussain Hilmy.

While the MMA Governor is also mandated to be part of the board, the position still remains vacant after former Governor Fazeel Najeeb resigned from his position.

Dr Azeema’s name was given to the People’s Majlis last month as President Yameen’s nominee for the governor’s post after Ibthishama Ahmed Saeed – an associate director at the Bank of Maldives – had been forwarded for the role before withdrawing her name amid suggestions she was not qualified for the role.

Today’s reshuffle is the second round of changes that the current administration has brought to the MMA board since it assumed power in November 2013.


President nominates new MMA governor

President Abdulla Yameen has proposed Ibthishama Ahmed Saeed for the Majlis’ approval as the new governor of the Maldives Monetary Authority.

Ibthishama’s nomination for the position comes after the resignation of Dr Fazeel Najeeb last week for what he cited as being made for family reasons.

Upon his departure, Najeeb urged the state to reduce expenses and to withhold from printing money to cover debts: “A central bank must not resort to printing and releasing money, especially at a time when the economy is as weakened as it is now.

The President’s Office today reported that President Yameen had written to the former governor, thanking him for his work in strengthening and modernising the central banking authority.


EC to seek AG advice on following Supreme Court guidelines

The Elections Commission (EC) has decided to seek advice from the Attorney General on whether the commission must follow the Supreme Court’s 16 point electoral guideline in the upcoming local council and parliamentary elections.

The Supreme Court had issued the guidelines in October in its verdict annulling the first round of presidential polls held on September 7. EC President Fuwad Thowfeek has previously slammed the guidelines as “restrictions”

EC member Ali Mohamed Manik told local media the commission is abiding by the Supreme Court’s guidelines in preparations for the upcoming elections. However, the EC may face the same challenges if the commission were to follow the Supreme Court’s requirements, Manik said.

The guidelines effectively give candidates veto power over polls as they state the EC must obtain the signature of all candidates on the voter registry and mandates the commission ensure that reports on the voting process are compiled in the presence of candidates’ representatives.

The EC has previously said obtaining the signatures of the 4000 candidates contesting local council elections will be “impossible.”

“While some of the points in the guideline state it applies to all elections, we can see that the complete guideline is actually intended for presidential elections when we look at it in its entirety. Most of what is in the full verdict is also about the presidential election. Furthermore, it will be very difficult to follow some of the points in it in other elections,” Manik said.

The Supreme Court’s requirements caused major delays in this year’s presidential elections with three contestants. The parliamentary election will have hundreds of contestants for the 85 constituencies, while the local council election will have over 4000 of contestants running for 1118 seats in island, atoll and city councils in 20 atolls.

LGA and MMA call to merge elections

The Local Government Authority (LGA) – chaired by Defence Minister Mohamed Nazim – has on Thursday announced it will work with the government to organize simultaneous polls for the local council and parliament.

LGA has also requested the government to include the proposal in the planned amendments to the Decentralisation Act.

“When all the elections are held together, it will decrease the economical cost caused by holding separate elections, while also lessening the tearing up of the national social fabric, which happens as a result of elections”, a statement from the LGA reads, as reported by local media Haveeru.

The statement further said that the funds spent on councils cannot be used productively unless the councils are developed and strengthened. The authority said the proposed amendments to the Decentralisation Act  will assist in cutting costs.

The Maldives Monetary Authority (MMA) has meanwhile recommended combining presidential, parliamentary and local council elections in order to reduce state expenditure and improve governance.


STO head assures oil imports problem will be resolved

The Managing Director of the State Trading Organisation (STO) has assured that the country’s looming oil payment crisis will be resolved tomorrow after the central banking authority committed to financing overdue payments.

“MMA [Maldives Monetary Authority] has given certain commitments – we still need to arrange everything – tomorrow we are going to work on it,” Shahid Ali told Minivan News today.

Shahid told MPs last week that the STO would run out of oil as early as November 10 if it did not pay some of its US$20million oil debt.

“The exact amounts have not been agreed upon,” Shahid explained today (October 3). “Tomorrow we need to make at least some payments.”

During an emergency meeting of the Majlis Finance Committee last week – with both MMA Governor Dr Fazeel Najeeb and Finance Minister Abdulla Jihad in attendance – Shahid told MPs that government-owned companies owed the STO more than MVR600 million.

Jihad informed the committee that he had asked the MMA to provide MVR50 million to the STO but was told that the central bank could only arrange for MVR20 million as the public bank account was overdrawn.

The MMA governor said the state did not have the financial resources to provide the requested amount, adding that the central bank would be forced to print money to meet the government’s requirements.

In the event that the country runs out of oil on November 10, Jihad then said he would resign from his post.

“I am asking the MMA for cooperation to provide the funds. This is a basic necessity. Otherwise there is a fear that we could completely run out of oil. Funds have to be arranged for citizens’ basic needs even if the public bank account is overdrawn,” he said.

Minivan News was unable to reach Dr Najeeb at the time of press.

When asked if the MMA was printing money in order to finance the oil payments, Shahid simply repeated that the authority had “given certain commitments”.

The MMA’s quarterly figures show that the Maldives’ petroleum imports amounted to US$248.4 million in the first half of 2013 – representing 29 percent of the cost of all goods brought into the country.

Najeeb also told the Majlis Public Accounts Committee last week that state reserves were insufficient to balance the country’s growing deficit.

Local media reported Najeeb as warning that the state was on the verge of being forced to print money.

“Parliament must also consider ways to reduce the structure of the State. I think this is very serious. Or else, the value of our money will keep dropping,” the Governor was quoted as saying.

The MMA’s most recent Quarterly Economic Bulletin revealed that government finances had “further deteriorated in the first six months of 2013” due to a sizeable shortfall in expected revenue coupled with a marked increase in recurrent expenditure.

After measures to raise 15 percent of total revenue budgeted for 2013 – MVR1.8 billion (US$116.7 million ) – failed to materialise, Finance Minister Abdulla Jihad was forced to seek parliamentary approval to divert MVR 650 million (US$42 million) allocated for infrastructure projects in the budget to cover recurrent expenditure.

In recent months, the government has become increasingly reliant on the issuance of short term treasury bills in order to plug gaps in the current budget.

Whilst introducing a proposed MVR16.4 billion (US$1 billion) budget for next year to the Majlis last week, the Finance Minister urged the government to pursue austerity measures.

In November 2012, a team from the International Monetary Fund (IMF) advised that strengthening government finances was “the most pressing macroeconomic priority for Maldives”.