Dollar issuance to banks prioritizing public: MMA

The Maldives Monetary Authority (MMA) said on Sunday that it will be issuing US dollars to commercial banks based on their prioritization to initiatives of public interest.

The central bank in a statement said that besides the Bank of Maldives (BML), other commercial banks in Maldives allow US dollar transactions from debit cards linked to MVR primary accounts.

MMA further said that though BML faces setbacks in managing card payments, it was fiscally healthy. The central bank added it had discussed with BML on multiple occasions related to setbacks in managing foreign transactions.

BML has attested to the increase in foreign transactions since Covid-19 pandemic in 2020, MMA added.

The currency surplus liquidity rose after the central bank approved public accounts overdraft for government’s cash flow management after the pandemic. MMA said the surplus liquidity stood at an average of MVR 6.7 billion by July end, with majority of this shared by BML.

MMA also said a major portion of this surplus liquidity was issued in personal loans, which stood at MVR 2.9 billion by the end of 2019 which rose to MVR 6.6 billion by the end of July this year. The central bank said this attributed to the rise in card usage.

The US dollar issued to commercial banks also gradually increased year-on-year, according to MMA statistics. Central bank sold USD 267 million to commercial banks in 2022, which increased to USD 307 million in 2023. The figure rose for the current fiscal year, with the highest share of this allocated for BML.

While highlighting the ongoing modernization efforts to solve systematic challenges in the financial sector, MMA said these reforms will expand the scope of Foreign Direct Investment (FDI) in the Maldives.

BML earlier on Sunday morning had announced it was suspending foreign transactions on all existing and new debit cards and new credit cards linked to MVR primary accounts, and setting a monthly usage limit of USD 100 on existing Standard and Gold credit cards.

The bank however, reverted the decision owing to widespread public backlash and MMA’s instructions.