Police in the Maldives are investigating an alleged attempt to topple President Mohamed Muizzu by stirring anger over the Indian Ocean archipelago’s worsening financial woes.
Last week, the main commercial bank in the upmarket tourist destination drastically reduced the foreign exchange spending allowed for Maldivians, sparking widespread anger.
Mr. Muizzu has slammed the move as an “illegal attempt” to overthrow his government, by making him unpopular and encouraging street protests.
“An investigation has been launched into the alleged coup attempt,” the police said in a statement on Monday. (August 26, 2024)
There have been no demonstrations in the capital Male, but scathing criticism of the government has erupted online.
“Hundreds of ‘bot’ accounts have been used on social media to encourage people to take to the streets to overthrow the government and incite public unrest,” police said.
The bank said the changes, which they have since rescinded, came “in response to the escalating usage of foreign currency spend on cards and the static sale of foreign currency to the Bank”.
The international credit rating agency Fitch downgraded the Maldives in June and warned it could be headed for a sovereign default, after its foreign currency reserves dropped to $492 million in May.
The downgrade came weeks after the IMF warned the Maldives against a looming “debt distress”, as the small but strategically placed country eyes further borrowing from main creditor China.
Pivot to China
Official data showed the Maldives’ foreign debt reaching $4.038 billion last year, about 118 percent of gross domestic product, an increase of nearly $250 million from 2022.
Fitch had noted the government’s debt servicing obligations, amounting to $409 million this year, would add to severe stress.
The crisis escalated over the weekend, when the Bank of Maldives Limited (BML) stopped debit card transactions, and allowed a maximum monthly credit card spend of $100 for online transactions.
Maldivians use their cards to pay for tuition and medical treatment abroad apart from online purchases.
Mr. Muizzu told supporters the bank decision was a plot to discredit him, and accused some BML directors of being loyal to the former government.
“There is room to believe that this (cap on spending) was an illegal attempt to overthrow a legitimate government,” Muizzu said.
The bank on Sunday (August 24, 2024) raised forex spending limits after the Maldives Monetary Authority intervened.
Political parties have called on the government to tax hotels in foreign currency.
Since winning office last year, Mr. Muizzu has reoriented his nation from traditional benefactor India and towards China.
As of June 2023, the Export-Import Bank of China owned 25.2 percent of the Maldives’ external debt and was the country’s biggest single lender, Male’s finance ministry figures showed.
