Maldives President Mohamed Muizzu condemned the move as an “illegal attempt” to overthrow his government. Photo Credit: AP
Police in the Maldives are investigating an alleged attempt to oust President Mohamed Muizzu by inciting anger among the people of the Indian Ocean archipelago. Worsening financial troubles,
Last week, the tourist destination’s main commercial bank sharply cut the foreign currency spending allowed for Maldivians, sparking widespread outrage.
Mr Muizzu has denounced the move, saying it was an “illegal attempt” to overthrow his government, making him unpopular and sparking street protests.
“An investigation has been launched into the alleged coup attempt,” police said in a statement on Monday. (August 26, 2024)
There have been no protests in the capital Male, but there has been sharp criticism of the government online.
“Hundreds of ‘bot’ accounts have been used on social media to incite people to take to the streets and incite public unrest to overthrow the government,” police said.
The bank said these changes, which they later withdrew, were made “in response to the increased use of foreign currency spending on cards and steady sales of foreign currency to the bank”.
International credit rating agency Fitch downgraded Maldives’ rating in June and warned it could be headed for a sovereign debt default after its foreign exchange reserves fell to $492 million in May.
The downgrading comes just weeks after the IMF warned the Maldives of an impending “debt crisis” as the small but strategically important country considers borrowing more from main lender China.
Tilt towards China
Official data showed that the Maldives’ foreign debt reached $4.038 billion last year, about 118 percent of gross domestic product, up by about $250 million from 2022.
Fitch had said the government’s debt service obligations, which reached $409 million this year, would add to the severe stress.
The crisis worsened over the weekend when the Bank of Maldives Limited (BML) restricted debit card transactions, and allowed a monthly maximum of $100 for credit card spending for online transactions.
In addition to online shopping, Maldivians also use their cards to pay for tuition and medical treatment abroad.
Mr Muizzu told supporters that the bank’s decision was a conspiracy to defame him, and accused some of BML directors of being loyal to the previous government.
“There is room to believe that this (imposing a cap on spending) was an illegal attempt to overthrow a legitimate government,” Muizzu said.
The bank increased the foreign currency spending limit on Sunday (August 24, 2024) following intervention by the Maldives Monetary Authority.
Political parties have demanded the government to impose tax on hotels in foreign currency.
Since coming to power last year, Mr Muizzu has reoriented his nation away from traditionally benevolent India and towards China.
As of June 2023, the Export-Import Bank of China held 25.2 percent of the Maldives’ external debt and was the country’s largest single lender, according to Maldives Finance Ministry data.