Nazim: Changing central bank governor foiled ‘financial coup’ attempt

The decision to replace Ali Hashim with Ahmed Munawar as the central bank governor last month foiled the recent ‘financial coup’ that the opposition is accused of plotting using the decision by the national bank to suspend foreign transactions from Rufiyaa cards, says Ahmed Nazim, the deputy speaker of Parliament and top politician from the main ruling People’s National Congress (PNC).

Police opened a criminal investigation this week, citing there’s room to believe the opposition had attempted to topple President Dr. Mohamed Muizzu’s administration by stoking up fears of a financial crisis and attempting to incite people to take to the streets.

In an exclusive interview to Sun on Wednesday, Nazim, who had initiated the no-confidence motion against Ali Hashim, said the Parliament was forced to remove the former governor due to failure to take initiative in resolving the economic issues facing the country, such as the US dollar crunch. Nazim said that he is now sure he made the right decision in having him ousted.

“We are all aware that the economy is facing critical days ahead. That we face great economic risks. Because when we took office and had the chance to look at the books, we saw huge loopholes,” he said.

Nazim called the Bank of Maldives (BML)’s decision to change card limits – a decision the bank later rescinded – "highly irresponsible".

He said that such a big move should not be made without prior warning, and that even if such a decision is implemented, people should be given time to prepare for such a change.

“People who use internet banking, the students who use the bank’s cards overseas, the people who work in embassies – all these people are dependent on card services. They cannot be providing these services at sunrise and then stopping it at sunset,” he said.

“Even if they do it, revise it or stop it – the people should be given time to adjust. Time for them to open dollar accounts or link their cards to dollar accounts.”

Nazim said that the action taken by the Maldives Monetary Authority (MMA) in response had been crucial.

On Sunday morning, the BML suspended foreign transactions for existing debit cards, as well as new debit and credit cards linked to MVR accounts. It also lowered the monthly limit for standard and gold credit cards to USD 100.

But it reversed the decision within hours, a move it said was based on instructions from its regulator, MMA.

The sudden decision to change card limits for foreign transactions had created massive public backlash, especially from Maldivian students based overseas and small businesses that sell imported goods.

“Because we had changed the governor, we were able to get it down and extinguish the fire that broke out in the morning by the time evening came,” said Nazim.

“Because we had changed the governor beforehand, the policy got implemented.”

Referring to measures announced by President Muizzu to resolve the dollar crunch, Nazim said that it is the first time he is seeing genuine efforts to address the core issues facing the country.

He said that a shortage of US dollars isn’t something new, but something that consecutive Maldivian administrations have faced over the years.

“But this is the first time we are addressing the core issue. Before this, we had been focused on causal factors and not the root cause. This problem has been here even during past administrations. But no efforts were made to resolve it,” he said.

“The measures that this administration, that [President] Dr. Muizzu announced are decisions that the entire country should be proud of and be grateful for.”

President Muizzu has announced measures aimed at boosting dollar revenue streams, including collecting taxes from companies that earn US dollars in US dollars, instead of Maldivian Rufiyaa, and forcing such companies to do currency exchanges solely from banks.

Nazim believes the measures will resolve the dollar shortage facing BML.

In its original statement announcing the changes to card limits, BML said it was compelled to make the changes because the card usage is much higher than foreign currency it is able to purchase – impacting the bank’s ability to provide foreign currency support to its business customers.

BML’s CEO and Managing Director Karl Stumke said that while the bank purchased approximately USD 60 million in foreign currency from customers this year, the card usage is threefold higher than that.

Stumke said that the bank has an obligation to protect its depositors and therefore cannot continue to sell more than it is able to purchase.