Hashim’s no-confidence motion on tomorrow’s parliament agenda

The no-confidence motion against central bank, Maldives Monetary Authority (MMA)’s Governor Ali Hashim, has been listed on the agenda for Monday’s parliamentary sitting.

The no-confidence motion against Hashim was put forth to the Parliament’s Public Accounts Committee by Deputy Speaker, Dhiggaru MP Ahmed Nazim, accusing the governor of failing to perform his duties as the head of the country’s central bank, on July 1^st.

Notice had been served to Hashim to appear before the Committee to respond to the motion on three occasions despite which he failed to attend citing health-related issues on all three occasions.

Following the last notice, Nazim proposed that the Committee decide on the motion without granting Hashim any further chances and based off an earlier written response from the governor.

Subsequently, members of Public Accounts Committee unanimously voted to recommend Hashim’s dismissal to President Dr. Mohamed Muizzu last Wednesday.

The members of the Committee highly criticized Hashim for his failure to appear before the Committee to respond to the no-confidence motion. They deemed him incompetent and in this trajectory, called for his dismissal and the appointment of a capable individual at the earliest.

Deputy Speaker Nazim, in his motion, alleged that MMA’s monetary policy had not been implemented to its best capacity as the Maldives’ economy declined to a point where it would be difficult to revive.

Nazim also said Hashim recommended indirect measures to control the issuance of bank loans and for banks to maintain reserves at a certain limit which had reduced the amount of money circulating in the economy. Moreover, he added that he does not see MMA properly regulating the domestic market, which the government is now seeking funds from.

Hashim refuted the accusations against him via the letter he sent to the Parliament on Monday.

In this regard, he attributed Maldives’ current economic troubles to the failure of the government to act on counsel provided by MMA and international financial institutions over the past years.  

According to the Maldives Monetary Authority Act, the governor of the central bank will be dismissed by the president, under the advisement of the parliament.

Hashim was appointed as the governor of MMA on September 8, 2019, during the Maldivian Democratic Party (MDP) administration, which held office from 2018-2023. He also served as finance minister from 2008-2010 during the first MDP administration.

Erdem Atas, the World Bank Country Economist and Resident Coordinator for Maldives, said that the economic vulnerabilities that the Maldives now faces is a combination of debt stock accumulation in the last 10 years, as well as continuously high fiscal and current account deficits over the same period.

He said that economic growth or additional financing cannot resolve the issue, and that expenditure cuts are necessary to reduce fiscal and current account deficits, which will primarily support central bank’s reserves, and help improve the debt situation in the medium-term.

Meanwhile, Fitch Ratings - a global credit rating agency - had downgraded the Maldives' long-term foreign-currency Issuer Default Rating (IDR) from 'B-' to 'CCC+' in light of the risk associated with rising external debt coupled with weakening foreign reserves, external financing and liquidity metrics.