Motion to dismiss central bank’s chief forwarded to committee for review

The no-confidence motion against Ali Hashim, the governor of the Maldives Monetary Authority (MMA), has been forwarded to the Parliament’s Public Accounts Committee for review on Tuesday.

A motion to counsel Parliament Speaker Abdul Raheem Abdulla to recommend to President Dr. Mohamed Muizzu to dismiss Hashim was initially put forth by Deputy Speaker, Dhiggaru MP Ahmed Nazim to the Public Accounts Committee on Monday. In the motion, he accused Hashim of failure to perform his duties as the head of the country’s central bank.

The motion was passed by the votes of all members in attendance except for one.

Henceforth, the motion was scheduled at Tuesday’s parliamentary sitting.

Parliament’s Secretary General Fathimath Niusha presented the report prepared by the Committee regarding the motion to the floor on Tuesday, which requested the speaker to announce the no-confidence motion against Hashim and issue summons to the governor to appear before the parliament.

According to the Maldives Monetary Authority (MMA) Act, the governor of the central bank will be dismissed by the president, under the advisement of the parliament. Henceforth, the speaker, in light of the Committee’s decision, must issue summons for Hashim to appear before the parliament. He will receive five days to prepare a response.

However, Nazim, at Monday’s Committee meeting, said that Hashim is currently on vacation in Singapore, and is set to return home on July 7. Thus, he noted that if the speaker announces the no-confidence motion on Tuesday, then the Parliament can summon Hashim on July 11 and make a decision.

Parliament speaker Abdul Raheem, on Tuesday, announced the no-confidence motion and subsequently forwarded it to the Public Accounts Committee. 

The committee is now tasked with reviewing the no-confidence motion. Their report on the motion will be submitted to the floor, which will make the final decision on recommending Hashim’s dismissal to the president.

Speaking at Monday’s Committee meeting, Nazim said Hashim recommended indirect measures to control the issuance of bank loans and for banks to maintain reserves at a certain limit. He said that it had reduced the amount of money circulating in the economy. Nazim added that he does not see MMA properly regulating the domestic market, which the government is now seeking funds from.

Hashim was appointed as the governor of MMA on September 8, 2019, during the Maldivian Democratic Party (MDP) administration, which held office from 2018-2023. He also served as finance minister from 2008-2010 during the first MDP administration.

Notably, Maldives is presently in a delicate financial state with President Dr. Mohamed Muizzu rolling out measures last week to cut the state’s recurrent expenditure, including reducing the number of political appointees, and reducing the spending on or canceling official events including upcoming Independence Day reception and parade. 

Also last week, Erdem Atas, the World Bank Country Economist and Resident Coordinator for Maldives, said that the economic vulnerabilities that the Maldives now faces are a combination of debt stock accumulation in the last 10 years, as well as continuously high fiscal and current account deficits over the same period.

He said that economic growth or additional financing cannot resolve the issue, and that expenditure cuts are necessary to reduce fiscal and current account deficits, which will primarily support central bank’s reserves, and help improve the debt situation in the medium-term.

Meanwhile, Fitch Ratings - a global credit rating agency - had downgraded the Maldives' long-term foreign-currency Issuer Default Rating (IDR) from 'B-' to 'CCC+' in light of the risk associated with rising external debt coupled with weakening foreign reserves, external financing and liquidity metrics.