Update Country Report Maldives 29 Jul 2019

Event

Ahmed Naseer, the governor of the Maldives Monetary Authority (MMA, the central bank) resigned from the post on July 24th with immediate effect.

Analysis

Shortly before he resigned, Mr Naseer was summoned before the public accounts committee of parliament to answer questions about his involvement in an investigation into the financial dealings of the former president, Abdulla Yameen. Abdulla Ashraf, a former head of the Financial Intelligence Unit (an independent agency within the MMA that functions as the country's anti-money-laundering watchdog) led this investigation. He has accused Mr Naseer of interfering with the inquiry and subsequently removing him from his post. Mr Naseer has, however, defended his decision to transfer Mr Ashraf and denied any wrongdoing in the matter.

Mr Naseer had assumed office in August 2017 and his seven-year term would have been completed in 2024. His premature departure has largely been driven by the shift in the country's politics that has occurred since the fall of Mr Yameen. It will not cause much disruption to the central bank's conduct of monetary policy. Indeed, in view of the peg between the rufiyaa and the US dollar, the MMA has little scope to conduct an independent monetary policy. We believe that Mr Naseer's successor will be someone from within the MMA, which will suggest a broad continuity in the body's operations. An internal candidate would also be more likely to have the necessary experience and skill set for the job, which would reduce fears about political interference in the authority.

Impact on the forecast

We maintain our forecast that the MMA will seek to maintain a fairly accommodative policy stance to provide support to the economy over 2019-20.