Some of you guys out there are going to ridicule at me, again - call me George Soros and other funny names, but that doesn’t change a thing about the fundamentals of our economy. I don’t claim to be George Soros and I of course don’t own Berkshire Hathaway. But this mediocre man with perhaps below very average intelligence also knows when all the telltale signs point to only one thing: without a substantial injection of hard currency into our economy, rufiyaa will have to be devalued. Our dollar crisis this year, is very much of an anomaly from the seasonal highs and lows that has become a characteristic feature of our economy. Here’s why.
- Our gross reserves are at just a little over 2 months of imports - almost a 15 year low. As far as I can see there’s no way reserves are going to increase to US$380.8 million or 3.2 months of imports by the end of the year, as has been predicted by MMA (see 4.2 of Monthly Economic review, Oct 08).
- The strong dollar coupled with the recession in EU region will substantially reduce our inflow of hard currency. So far, we haven’t seen this happening because of the 2-3 quarters’ lag that’s involved in the cycle. Last year we were saved from a devaluation by the unprecedented advance lease rentals we collected from the resort leases which increased our reserves to USD300million.
- We are in the midst of hajj season, school holidays and bodu-eid. Our people are traveling overseas in large numbers (how they finance it would make another good blog post). Our hajj travelers, holiday makers and expat teachers are going to drain, within the next month or two, whatever little stock of hard currency we have within our banking system now.
- With oil below USD50 now, the dollar isn’t going to fall anytime soon. Over the last five years, with greenback on the ventilator, we automatically offset any pressure on the Rufiyaa resulting from the expansionary policies of Gasim (kudos to Ali Hashim for trying to reign in the pressure, but this could be too little too late). We did the last devaluation under Mohamed Jaleel in July 2001. Ever since, the Euro has generally appreciated against the dollar thus making
9 comments:
u gorge soros?
george soros is now working for the govt of a small impoverished country thats going to disapper from the face of the earth in 50 years.
Good that you brought the issue into perspective. It's sad but I bet most of our people will remain blissfully ignorant about this because economics is an "uninteresting" issue; they would rather watch Sunita move her ass on some copyright-violated Dhivehi version of a Hindi song on Heyyanbo. Is that show on now by the way? I don't watch TVM and I don't regret it. Don't want my sanity violated by these so-called local cultural productions. Oh, I am totally fine if anyone accuses of me being snobbish because well, what do they really know about me or my state of mind.
Good article and analysis. I agree with the comment of Hilath as well. In Maldives economic issues take a backseat to all other front line issues such as politics, entertainment etc.
We need educated and experienced economists to form an independent body through which they could analyze our economy and voice out their concerns and opinions.
So as u said in ur analysis, we need hard cash injection into the economy. The question being how? The global economy is in a credit crunch. Would be good if you could offer us your thoughts as to the solution for the problem.
george soros is jewish banker..is New maldives friend. he gives money to hassan saeed.
Yes, hilath. it is very sad. But what really matters is economics. We are all so much involved in politics that we got ourselves blinded to the real issues.
Good points raised.
It is tragic that in the Maldives, the amount people spend on their coffees and shopping sprees are does not seem to lessen at this critical time. In the western world, I see people trying to cut down on their weekly expenditure for groceries even. But then again,
But truth be told, if those coffee goers and shopaholics stop their outings the impact will be felt much higher. If people are unwilling to spend, the businesses will start failing... vicious cycle eh?
@ anonymous 7:42 - wrong guy. I'm sorry. I believe anonymous 8:32 has answered your question before I did.
@Hilath - yes, media is also partly to be blamed for our ignorance on economic issues. Over the last 3-4 years we ate and slept only one thing - politics. We have become a nation full of wannabe politicians. Even when I reactivated this blog some people thought I was slowly laying the foundation for a possible majlis seat one day. pathetic. suneetha's rear end and some moron rambling about politics is what all this country cares about while the rest of the world is dead scared about whats ahead. We still have no idea of the depth of the abyss that we are in.
@H. Shakeela - thanks, interesting angle. it will make an interesting blog post.
Er, on the positive side, I am happy Suneetha defied the fundamentalists and was "brave" enough to dance around in that DRP party. Down with extremism!
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