Time for economic reforms

I have been following the Subprime Mortgage crisis from its very beginning in August 2007, partly because I love economics and partly because I’m doing a banking and international finance course. I watched what initially started as a mortgage crisis in USA turn into a financial crisis bringing down many well renowned Investment banks like Bear Stern and Laymen Brothers, before evolving into a full fledged economic crisis, threatening economies globally. I realized the gravity of the crisis by then and tried to bring the topic into the Maldivian blog sphere, but we were too deeply involved in politics. It seemed that nothing was more important than the political chaos in our country. So the efforts made by some few bloggers to bring the spot light on to the financial crisis and our economy went without a fruit.

Today, with the severe dollar shortage in our economy, topics concerning our economy have gained some leverage in Maldivian public forums. More articles conveying the global economic conditions are appearing on our daily newspapers and some local journalists have joined some few bloggers in reflecting upon these events with regards to our local economy.

For too long, we have been taking our economy for granted. Our Rufiyaa was pegged with US dollar under a fixed exchange rate regime and it has been serving us well as often acknowledged by international institutions like IMF. But we have forgotten the reasons why the peg with dollar was serving us well. So even when our economy significantly went out of alignment with the US economy still we are continuing to keep our faith in this exchange rate regime which served us so well in the past.

We have been building our economy on a highly concentrated industrial base, disregarding the fact that it can completely sabotage our economy in case of an external shock. We were too passionate in developing the tourism sector while other strategic industries like farming and fishing went down gradually. We could have found many other economically viable ways of using our uninhabited islands rather than building resorts on all of them, if we really gave a damn about it.

Even when the government is in the hands of a relatively conservative party, still there seems to be a very limited chance of seeing some Government Business Enterprises being privatised completely. Without more listed companies our Infant Stock market and securities trading will be heading nowhere.

We have seen major political reforms in our nation. So I think it’s time for us now, to think about our economy and bring some fundamental economic reforms.