South Hulhumalé MP and Finance Committee member Dr. Ahmed Shamheed has warned that the Maldives’ ongoing dollar shortage will not be resolved unless the government halts the use of dollar-denominated loans for social projects.
In an interview with local media, Dr. Shamheed said the government’s current fiscal approach is expected to push the unofficial dollar exchange rate to MVR 22 this year, driven by a growing gap between demand and supply. He explained that continuing to borrow in U.S. dollars for non-revenue-generating projects would only worsen the crisis.
According to Dr. Shamheed, even if the government manages to collect all foreign currency flowing into the country, the shortage will persist unless there is greater financial discipline. He stressed that while foreign funding, including loans from India and other countries, may help launch development projects, the Maldives lacks a sufficient mechanism to repay those loans in dollars.
He estimated that the country’s external debt obligations could rise to around \$6 billion by the end of the year. Although India has recently extended a \$500 million loan, and additional funding is being sought, these borrowings are not resulting in a return of dollars to the local market.
Dr. Shamheed called for a temporary suspension of social projects funded by foreign loans, emphasizing the need to retain a significant portion of foreign exchange earnings in dollars to stabilize the economy.
The black-market rate for the U.S. dollar has now exceeded MVR 20, significantly higher than the official bank rate. With banks facing a shortage of dollars, the public is increasingly relying on the black market to obtain currency for essential imports.
While regional leaders have expressed optimism that the dollar issue will be resolved by 2027, Dr. Shamheed noted that the government’s current efforts have not yet produced meaningful results.
In an interview with local media, Dr. Shamheed said the government’s current fiscal approach is expected to push the unofficial dollar exchange rate to MVR 22 this year, driven by a growing gap between demand and supply. He explained that continuing to borrow in U.S. dollars for non-revenue-generating projects would only worsen the crisis.
According to Dr. Shamheed, even if the government manages to collect all foreign currency flowing into the country, the shortage will persist unless there is greater financial discipline. He stressed that while foreign funding, including loans from India and other countries, may help launch development projects, the Maldives lacks a sufficient mechanism to repay those loans in dollars.
He estimated that the country’s external debt obligations could rise to around \$6 billion by the end of the year. Although India has recently extended a \$500 million loan, and additional funding is being sought, these borrowings are not resulting in a return of dollars to the local market.
Dr. Shamheed called for a temporary suspension of social projects funded by foreign loans, emphasizing the need to retain a significant portion of foreign exchange earnings in dollars to stabilize the economy.
The black-market rate for the U.S. dollar has now exceeded MVR 20, significantly higher than the official bank rate. With banks facing a shortage of dollars, the public is increasingly relying on the black market to obtain currency for essential imports.
While regional leaders have expressed optimism that the dollar issue will be resolved by 2027, Dr. Shamheed noted that the government’s current efforts have not yet produced meaningful results.
