The government has condemned the actions of the Z-faction of the opposition Dhivehi Rayyithunge Party (Z-DRP), led by former President Maumoon Abdul Gayoom, for organizing a third night of violent protests in the Maldives capital Male’.

Protestors, led by Members of Parliament aligned to the Z-DRP, gathered last night at around 9pm. Scuffles broke out between anti and pro-government supporters, before police dispersed the crowd with tear gas and made a number of arrests.

At around 1am, anti-government protestors regrouped near the Maldives Monetary Authority. When the police dispersed the crowd, protestors set fire to motorbikes and smashed the windows of a police station and a local business.

The Z-DRP says it is holding the protests over the government’s decision last month to introduce a managed float of the Rufiyaa, allowing the currency to fluctuate within a 20% band of its previous dollar peg.

The decision to introduce the managed float of the currency is part of a package of measures the government has introduced, on the advice of the central bank, IMF and other multi lateral organizations, in order to reduce the country’s budget deficit and stabilize the economy.

Earlier this year, the government also introduced a 3.5% Goods and Services Tax (GST) for the tourism industry and passed legislation to introduce a Business Profits Tax. The government has also introduced a package of measures to restructure the civil service through voluntary redundancies.

In late 2008, President Nasheed won the Maldives’ first democratic elections, ending 30 years of authoritarian rule by former President Gayoom.

According to the World Bank, in late 2008 the Maldives was in the worst economic situation of any country undergoing a democratic transition since the 1950s. The budget deficit stood at 31% of GDP, inflation stood at 12% and the economy was reeling from a massive fiscal expansion which saw the government wage bill increase by almost 400% between 2004 and 2009.

Since coming into office, the Nasheed administration has reduced the budget deficit from 31% to 16% of GDP, helped ease the chronic dollar shortage through a managed float of the Rufiyaa and brought the economy from recession to 4% growth this year.

At a ceremony to commemorate International Workers Day on 1 May, President Nasheed announced that he would accelerate the government’s economic reform programme by introducing income tax for high earners, establishing a minimum wage and introducing GST to all sectors. He also announced that import duty on a wide range of essential goods would be cut, starting from 1 January 2012.

On the 30 April, former President Gayoom, after months of bitter in-fighting within the opposition DRP, announced that he was leading a new faction called the Z-DRP. The next day, the party organized the first of the three violent protests witnessed this week.

“The government understands that many people are concerned about the economy and recent price rises and we are doing everything possible to ease the situation,” said President’s Office Press Secretary Mohamed Zuhair.

“Peaceful protest is legal and welcome in the Maldives’ new democracy. But former President Gayoom is taking advantage of the economic situation to cause violence in the streets. These protests are more to do with Gayoom trying to shore up his position in the opposition, than the state of the economy,” added Zuhair.

“In the Middle East, you have democrats on the streets bringing down dictatorships. Ironically, in the Maldives, the remnants of the former dictatorship are trying to bring down a democratically elected government,” said President’s Office Press Secretary Mohamed Zuhair.