MMA spends $212 million from reserves to repay debt
The exchange rate continues to face pressure due to structural factors affecting reserve accumulation.
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The Maldives Monetary Authority (MMA) has reported that $212.6 million from the country's reserves has been used to repay external debt as of July 2025. The information was released in a monetary policy update issued by the central bank.
The MMA stated that despite continued growth in the tourism sector and a year-on-year increase in foreign exchange inflows since 2021, reserve levels have not improved to the expected degree. The exchange rate continues to face pressure due to structural factors affecting reserve accumulation.
The authority highlighted several reasons for the limited impact of increased foreign exchange inflows:
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The cost of oil imports has increased since 2022.
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From 2017 to 2021, oil expenditure averaged 33% of the MMA’s foreign exchange sales under its intervention policy. This figure rose to 49% on average between 2022 and 2024.
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The MMA increased foreign currency sales to banks to meet debt obligations of the government and state-owned enterprises, and to meet public and private sector demand.
The MMA also noted that the Maldives has faced difficulty accessing external financing in recent years due to a rise in sovereign external debt as a proportion of GDP.
Tourism and tax revenues remain the main sources of foreign exchange inflows. In the first seven months of 2025, foreign exchange earnings increased by 30% compared to the same period in 2024.
Banks deposited $247.2 million with the MMA during this period, as part of obligations under the Foreign Exchange Act.
Reserve usage in the same period includes:
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$212.6 million for external debt repayments, reflecting a 60% increase year-on-year.
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$274.3 million in sales to the State Trading Organisation (STO) for the import of oil, cardboard, and medical supplies.
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$217 million sold for Umrah travel groups and individuals travelling abroad for private and business purposes.
The MMA has implemented several policy changes aimed at stabilising the exchange rate and strengthening reserves:
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Regulations now require banks to deposit all foreign exchange earnings into local banks and sell a designated percentage to the banking system.
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Since June 2025, banks have been required to sell 60% of their dollar holdings to the MMA and an additional 30% which the MMA returns to banks for redistribution.
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These changes are aimed at improving the equitable distribution of foreign currency to businesses and individuals through structured weekly sales.
In June and July, the MMA sold a total of $23.3 million to banks. Total foreign exchange sales for business and personal use as of July increased by 23% compared to the same period last year.
