Ministry of Finance has requested the Parliament of the Maldives to extend the suspension of certain clauses of the Fiscal Responsibility Act by one more year.
On April 26, 2020, the Parliament approved a motion to suspend, by one year, Article 32, section (a), (d), and (e) of the Fiscal Responsibility Act to allow the government to take long-term loans from Maldives Monetary Authority (MMA) in order to manage the cash flow of the state amid the COVID-19 pandemic. Article 32 states the government is required to pay back loans from the central bank in full within a 91-day period. It also caps the maximum borrowable amount to not exceed 1% of average government revenue over the past 3-year period.
In a letter to Parliament, Minister of Finance Ibrahim Ameer said the government is still not close to recovering from the COVID-19 pandemic. Highlighting the significant decrease in revenues, Minister Ameer said the total state income in the four quarters of 2020 had not come close to one quarter of 2019.
The minister also said the country's financial crisis and increase in unemployment due to the pandemic has affected its balance of payments. Due to these reasons, he said the government is still facing circumstances to qualify for exemptions in accordance with Article 36 of the Fiscal Responsibility Act, and having to follow the restrictions stipulated in Article 32 would severely hinder the ability of the state to manage its cash flow.