Maldives News Bulletin - Volume 127

The Ministry of Finance and Treasury of Maldives has reaffirmed the government’s commitment to fiscal reforms in response to the recent Fitch Ratings adjustment.

Fitch Ratings downgraded the Maldives’ Long-Term Foreign Currency Issuer Default Rating from “CCC+” to “CC” today.

This downgrade reflects Fitch’s assessment of pressures on the external and fiscal sectors.

The Government of Maldives remains committed to mitigating these risks through comprehensive fiscal consolidation measures and securing medium-term financing with bilateral and multilateral partners’ support.

First Lady Madam Sajidha Mohamed has appealed on integrating cultural history into everyday life. She made the appeal on Thursday while speaking at the inauguration of the ‘Dhivehi Sagaafee Goathi’ by the Maldives Correctional Service (MCS) at Maafushi Prison.

In her remarks, the First Lady emphasised the benefits of integrating the Maldives’ rich cultural history into everyday life. She further highlighted that President Dr Mohamed Muizzu’s national policy of reviving nationalism has important objectives, meanings and benefits.

The First Lady stated that reminiscing about the cultural history of the Maldivian people shows a society free from social diseases and a prosperous and proud Maldives. Emphasising Maldivian culture and heritage details, the First Lady stated that solutions to societal problems can only be derived from reviving nationalism.

The ‘Dhivehi Sagaafee Goathi’, inaugurated in Maafushi Prison, is a traditional Maldivian house that showcases Maldivian culture and traditions and displays several traditional and cultural artefacts.

The ‘Dhivehi Sagaafee Goathi’ will be used during the rehabilitation process of Maafushi Prison inmates to provide training opportunities for traditional craftsmanship.

^{SOURCE : The President’s Office}

Minister of Economic Development and Trade Mohamed Saeed has stated that any downgrade is the spillover effect of the previous administration purging the entire monetary system.

He made the statement in response to his predecessor Ibrahim Ameer’s claims of worsening economic conditions.

Minister Saeed indicated that the previous administration only had the aims of securing a second term rather than that of implementing sound economic policies. The monetary system’s purge, he said, was caused by:

• Excessive money printing

• Expanding the Central Bank balance sheet

• Deferring bond repayments

• Crowding out the banking sector

Calling the previous administration’s attempts a ‘total disgrace’, Minister Saeed completely refuted their claims of a downgrade. He reiterated his stance on social media, emphasizing that there is no downgrade in GDP growth. The Minister maintained that any perceived economic challenges are a direct result of the previous administration’s actions, which he claims were aimed at winning an election rather than implementing sound economic policies.

In a previous press conference, Minister Saeed did address the claims of economic mismanagement, citing that it was very easy to criticize. He noted that when given the opportunity to instate long-lasting beneficial economic reforms, the previous administration had only resorted to raising and introducing direct and indirect taxes. This, in turn, had increased the fiscal burden on citizens, while real reforms of reducing government expenditures had proceeded ahead without any checks.

^{Source: PSM}

The President’s Office has commenced accepting applications for the position of Member of the Tax Appeal Tribunal on Thursday, which is currently vacant.

Applications will be accepted from 8:00 a.m. to 12:00 p.m. on Tuesday, September 17, 2024, at the reception of the President’s Office.

Application forms are available from the President’s Office reception and are available for download at www.presidency.gov.mv.

^{SOURCE : The President’s Office}

Controller General of Maldives Immigration Mohamed Sham’aan Waheed has disclosed that the authority has deported more than 3,000 expatriates working and conducting businesses illegally. Those deported also include foreigners who were working in the Maldives with incomplete documentation.

Speaking to PSM News, Sham’aan disclosed that as of August 25, a total of 3,322 foreigners were deported from the Maldives. He noted that this is a 64.3 percent increase compared to the 2,021 foreigners deported from January 1, 2023, to November 16, 2023.

Noting that the expatriates must be kept at the detention centre before deporting them, Sham’aan stated that the existing detention facility is not the most suitable facility to work at the speed the authority is aiming for. The target, he said, was to develop and expand the facility to house more than 200 people at the same time.

Maldives Immigration has made significant strides in addressing the issue of undocumented migrants, aligning with President Dr Mohamed Muizzu’s Pro-Maldives vision.

The initiative to address undocumented migrants was launched by President Dr. Muizzu in July, following Cabinet recommendations.

Joint operations between the Ministry of Homeland Security and Technology and the Maldives Immigration have led to the detention of several immigrants involved in illegal trade and food production activities that fail to meet food security standards. These individuals are to be deported in the coming days.

To tackle the issue of illegal immigrants, the government has introduced a nationwide programme named Operation Kurangi. The operation includes biometric identification procedures aimed at targeting undocumented migrants and facilitating their deportation through coordinated efforts with relevant embassies. The Government aims to solve the issue of illegal immigrants completely within three years.

^{Source: PSM}

The Ministry of Social and Family Development has revealed the government aims to identify children who are victims of abuse and rescue them beforehand.

Monthly statistics released by the Ministry indicate that most cases filed with the Ministry constitute cases related to children. Ministry stated that they were attempting to understand the underlying causes and solutions.

Providing insight on the issue, the Social Service Coordinator of the Ministry Abdulla Ashraf stated that some parents have been providing the Ministry with relevant information, via the ministry’s help line. He said that the Ministry provides the parents with important steps they can take to ensure the safety and security of their children.

In addition to providing services through the held line, Ashraf highlighted the ongoing efforts of the ministry to establish small groups in islands under the name “Ibama”, aiming to mitigate child-related problems.

He revealed the groups are responsible for identifying children who could be potential victims of abuse and ensure the safety and security of the children.

During the first six months of the year, a total of 125 cases related to domestic violence were reported to the Ministry, along with 119 cases of physical abuse and sexual abuse, 111 cases of neglect and 37 cases related to emotional abuse. The Ministry stated that the total number of cases reported during the first six months totals to 1,341. Of these, 589 cases are of children, which is 43 percent of the total cases submitted.

^{Source: PSM}

The Ministry of Islamic Affairs has introduced a new system for making online donations through its official website. A dedicated page for this purpose was inaugurated by Minister of Islamic Affairs Dr Mohamed Shaheem Ali Saeed

The page will feature news articles, updates on mosque development funded by donations, and financial reports.

Speaking at the ceremony, Minister Dr Shaheem shed light on the importance of donating. The Minister stated the facilitation of online donation services will provide a convenient option for contributors and urged individuals to offer their maximum support for religious initiatives.

Donations can be directed towards various causes, including financial support for Quran classes, Umrah trips, higher education in the religious field, the establishment of Islamic libraries, mosque development, religious activity sponsorship, and mosque assistance.

^{Source: PSM}

The Maldives Monetary Authority (MMA) has addressed the country’s economic outlook and monetary measures in response to the recent Fitch Ratings assessment of the Maldives’ credit rating. In its comprehensive statement, the MMA outlines key economic indicators, reserve positions, and planned monetary strategies to strengthen the nation’s financial stability

The MMA notes that it is vital to refer to the strategic changes and plans to develop and sustain the economy. As the tourism industry and other vital industries are developing, the economy is also on the same tangent. By August 27, the Maldives recorded an 11 percent increase in tourist arrivals compared to the same period the previous year. The average bed nights have increased by seven percent from January of this year, compared to the same period last year.

Based on these factors, the MMA projects that the Gross Domestic Product will increase by 4.9 percent this year, with this figure expected to reach 6.5 percent in 2025. One core reason for this increase is attributed to an expected increase in tourist arrivals, with the opening of the new terminal of Velana International Airport by the end of this year. Consequently, the Balance of Payments Current Accounts deficit that was at 21.4 percent in 2023 will be at 19.9 percent this year.

The MMA also notes that it is vital to refer to the following aspects in comparing the official reserves and the components of the official reserves last year July and for the same period this year. The official reserves at the end of July this year stand at USD 395 million. The usable reserves were at USD 45 million. After incorporating the USD 100 million currency swap with the Reserve Bank of India, taken during last year’s this period, the total reserves were at USD 594 million. The usable reserves were at USD 129 million. This includes the amount US dollars exchanged and deposited to the Sovereign Development Fund from December 2019 onwards.

As such, by the end of November 2023, the US dollar custodian account of the Sovereign Development Fund held USD 5 million. This figure has now increased to USD 65 million to date. This change was brought about by the Government’s decision to keep the US dollars in the Sovereign Development Fund, instead of exchanging it. Consolidating the amount recorded as usable reserves, the Fund now holds USD 105 million. It is expected that by including the amount in the usable reserves and Sovereign Development Fund, the total reserves of the Maldives are expected to bypass the amount specified in the 2024 national budget of USD 606 million.

The MMA and the Government are in the process of finalizing and issuing a refinance green bond, as part of our efforts to better the reserve position. In addition, we have concluded the official technical talks with Reserve Bank of India, under the SAARC framework, to establish a USD 400 million foreign currency exchange swap agreement. This agreement is to be signed in the coming weeks.

The main challenge to maintaining exchange rates in the foreign currency market in the Maldives, is directly attributed to the surplus liquidity caused by unchecked bank overdrafts. The unchecked bank overdrafts were a response to the economic challenges and cashflow management issues that followed the covid-19 pandemic. As such, surplus liquidity of the banking system was at an average of MVR 6.7 billion at the end of July 2024. The MMA will implement monetary measures to address the surplus liquidity in the banking system and stabilize the exchange rates. The Board intends to pass changes to the MMA monetary policies to alleviate the foreign currency liquidity issues faced by commercial banks active in the Maldives.

Additionally, it is expected that the measures of medium-term fiscal and debt strategies implemented will improve the fiscal position of the country. The MMA is confident of the strategies in place, drafted and implemented by MMA, Finance Ministry, relevant Government bodies and financial institutions of the country.

^{Source: PSM}

The Maldives Association of Travel Agents and Tour Operators (MATATO) has announced the Association fully supports the fiscal reform measures of the government. In a statement made public by the Association, it refuted the claims being made that the Association refuses to cooperate with the decisions made by the government to resolve the fiscal situation of the state.

In its statement, MATATO said it recognises the importance of effective fiscal policies to reform and strengthen the existing financial system. It noted the importance of reforms that will enhance revenue collection to address inefficiencies within the system and added that the Association will provide full cooperation to the government.

It also made clear that the Association is willing to provide full cooperation with the government in its decision to amend the Tax Administration Act to collect tax in US dollars for income earned in the currency. MATATO stated that the change will boost the country’s economy. MATATO gave full assurance that it will continue to support the efforts of the administration to develop the tourism industry and the economy.

The Government announced the decision to amend the Maldives Pension Act and the Tax Administration Act, to facilitate businesses that generate income in dollars by allowing them to make governmental payments in dollars. The government has announced these amendments will be presented to Parliament within the next two to three weeks.

The amendment to the Tax Administration Act will enable companies earning revenue in dollars to pay corporate income tax in the same currency. Similarly, the amendment to the Pension Act will ensure that individuals receiving their salaries in dollars will also have their pension contributions made in dollars. Additionally, changes will be introduced to the regulations governing payments to the Maldives Customs Services, allowing these transactions to be conducted in dollars.

^{Source: PSM}

Ministry of Tourism has revealed that over 100,000 tourists from Italy have visited the Maldives so far, this year.

This ranks Italy as the top fourth market source of tourists, with a total of 100,082 arrival as of August 26. This is a remarkable progress compared to 2023, as Italy was ranked as the sixth, with 118,412 tourist arrivals recorded by the year-end.

While the tourist arrivals from Italy have increased significantly, the government has been exerting several efforts to advertise and promote the Maldives in various platforms. Under these efforts, the tourism ministry has announced plans to host roadshow in Italy

The daily report shows that Chinese tourists make up the largest portion of arrivals so far this year, with 194,907 visitors. The statistics indicate that total arrivals have passed 1.3 million arrivals. This is a 10 percent increase compared to the tourist arrivals last year.

Daily arrivals average 6,298 tourists per day, with tourists spending an average of seven days in the country. With these numbers, the government aims to welcome two million tourists by the end of the year. This goal can be accomplished with the arrival of an additional 659,804 tourists.

^{Source: PSM}

The Government has transferred the Home for People with Special Needs (HPSN) in Guraidhoo Island in Kaafu Atoll, under the Ministry of Health. This initiative aims to change the HPSN as a treatment centre and provide the individuals the opportunity to reunite with their respective families and society.

The HPSN was established in 1976, aiming to offer protection and care to individuals with mental health conditions, societal outcasts, and those without parental or guardian support. It was previously under the Ministry of Social and Family Development. The Ministry had brought remarkable changes to the services provided during the past nine months, including enhanced treatment and efforts to reconnect individuals with their families.

A key development at the centre includes the implementation of reintegration programmes, which are designed to ensure the HPSN functions as a temporary facility. These programmes focus on equipping residents with essential domestic life skills to facilitate their reintegration into family and societal settings following their treatment.

Aiming to ensure the provision of quality services, HPSN conducted a project aiming to increase the bed capacity of the centre. With this, the centre is now facilitated with 70 additional beds, ensuring that the centre is able to accommodate all the individuals living there.

One notable infrastructural development of the centre includes the establishment of a reintegration ward. The reintegration ward was opened on May 27, aiming to teach people about household life before reuniting with their respective families. Various programmes are held at the centre, aiming to rehabilitate individuals while imparting practical skills. For instance, a specialized cake designing course was conducted for female clients, with ten participants. The ward is designated for women who are receiving treatment for mental health issues and are ready to reintegrate into society.

Furthermore, mental wellbeing programmes have also been organised in the centre along with camps to consult with doctors for special diseases. A new system has been established to provide information and support to residents and their families, ensuring a safe and supportive environment for those in treatment. Efforts are also underway to recruit additional staff, including specialized mental health doctors and therapists.

The HPSN currently accommodates 219 individuals, with 31 individuals over the age of 65. While the centre has been transferred to the health ministry, decisions have been made to determine a budget to run the centre and to transfer the employees under the ministry as well.

^{Source: PSM}

The Ministry of Agriculture and Animal Welfare and Venza Company Private Limited inked a partnership agreement to establish a National Agriculture Laboratory Facility in Fuahmulah City. The agreement was signed by Minister Dr. Aishath Rameela on behalf of the Ministry and Managing Director Mr. Abdulla Hanis Moosa on behalf of Venza Company Private Limited.

The project, worth MVR 11 million, is funded under the government’s Public Sector Investment Programme (PSIP). The project must be completed within 12 months of the contract awarding date.

The new facility will comprise specialized laboratories in plant pathology, entomology, soil science, and tissue culture, enhancing the country’s agricultural research and development capabilities. All necessary equipment for the Soil Science laboratory has already been supplied to the Fuahmulah Council through the Project for Developing Sustainable Agricultural Economy (PDSAE), a collaborative initiative led by the United Nations Development Programme (UNDP) with generous funding from the People of Japan.

The equipment for the plant pathology, entomology, and tissue culture laboratories was sourced through the Maldives Agribusiness Program, implemented by the Ministry with funding from the International Fund for Agricultural Development (IFAD).

The Ministry reported that they intended to recruit and train technicians from Fuahmulah City to ensure that the laboratories can begin providing services immediately upon completion. This recruitment and capacitybuilding effort will be supported by the Transforming Fisheries Sector Management in the South-West Indian Ocean Region and Maldives Project, implemented by the Ministry of Fisheries and Ocean Resources with funding from the World Bank.

The establishment of the National Agriculture Laboratory Facility is a crucial step in strengthening the agricultural sector in the Maldives, providing local farmers and researchers with the tools and expertise needed to enhance productivity and sustainability.

^{Source: PSM}