Maldives targets forex shortage with new strategic plan

The Maldives Monetary Authority (MMA) is weighing changes to the way it sets monetary policy as it looks to reduce dollarisation and tackle a “persistent” shortage of foreign exchange.

“Given the import-dependent nature of the local economy, the interrelated problems of the shortage of foreign exchange and high dollarisation are the two most pressing issues,” writes governor Ahmed Naseer in the introduction to the MMA’s new strategic plan.

The authority plans to redesign its monetary policy framework to add “incentive mechanisms for local currency”, which should simultaneously reduce dollarisation and cut demand for forex. The document offers only limited details of the new framework but says the MMA would consider pushing for legislation that could make policy “more favourable” towards the Maldivian rufiyaa.

The authority plans to shake up its internal governance, saying it would automate some “critical processes” in human resources, procurement and budgeting, while improving governance, controls and risk management.

The MMA is also looking to improve the resilience of its IT systems, improve communication with the public, fill in data gaps, and develop its forecasting capabilities.