Black Market of US Dollars completes third year, says Minister Inaaz

Minister of Finance Ahmed Inaaz said today that the black market for US Dollars has gone on for more than three years, and that there is no control of the authorities over the foreign currency exchange in the Maldives.

Addressing the Parliament today while presenting the Budget for the year 2012, the Minister said that a black market for US Dollars was formed and a market imbalance came about as a result of government budget deficit.

“Imbalance in the Balance of Payments is not a problem that can be solved by a measure taken by just one institution or area. Recent years have seen increase in budget deficits, increase in circulation of local currency, and more foreign currency leave the economy than enters, and these have caused the foreign exchange market to become unstable”, said the Minister.

Minister Inaaz said that the solution to the black market of US Dollars was to ensure sustainable and new ways of government income and to reduce and control government expenditure. While the Minister spoke of this, the deficit of this year’s budget is more than last year, as the budget is at 14.7 billion, with a 3.8 billion deficit.

The Minister also said that regulation of foreign exchange market should be made tighter and more efficient. He stressed the importance of using local currency in all transactions as one of the key steps to solve the problem.

“We have to be concerned for 47 per cent of transactions made in our economy are made through other currencies than our legal tender. This is a fact that is directly connected with the constant dropping of the value of our currency, and I call upon MMA, the Central Bank, to take necessary steps to find a solution to this serious problem”, said the Minister.