Finance Minister Ameer requests extension for MMA overdrafts

Minister of Finance Ibrahim Ameer has addressed a letter to the People's Majlis, requesting a one year extension to the period of suspension for some clauses of the Fiscal Responsibility Act, so that the state may continue to obtain funds unlimitedly from the Maldives Monetary Authority (MMA) in order to manage it's budget and expenditure for the ongoing year.

In a letter signed and submitted to parliament on Monday, Finance Minister Ameer requested, under Article 36 of the Fiscal Responsibility Act, an extension for the suspension of clauses mentioned under subsections 1, 4 and 5 of Article 32 of the same Act.

Under the article, the state will be able to acquire one percent of the state's income from the central bank, Maldives Monetary Authority (MMA) as overdraw, and will be required to repay the money to MMA over a period of 91 days.

In April last year, the Maldives extended the overdraw limit to MVR 4.4 billion at the request of Minister of Finance Ibrahim Ameer, along with a one-year suspension for the repayment clause, which will end on 26 April 2021.

The letter sent to parliament by Minister Ibrahim Ameer on Monday requests to extend the overdraft period once more, noting that the Maldives had yet to rally from the economic downturn caused by Covid-19 despite early signs of recovery.

The Minister of Finance Ibrahim Ameer in his letter noted that an overdraft of MVR 2.8 billion have been obtained by the state, while the Fiscal Responsibility Act states the limit as MVR 170 million at the end of the year. Minister Ameer went on to declare that state expenditure would need to be cut down drastically in order to manage the Maldives' short-term cash flow.

Statistics by the Ministry of Finance detail that the closing balance of state cashflow for Maldives at the end of May 2021 would be MVR -2.1 billion, with the closing balance projected for the end of the year placed at MVR -1.9 billion.