Maldives reserves rise to $775 million by July end

The Maldives Monetary Authority (MMA) has reported that official reserves reached USD 775 million at the end of July, an increase of USD 67 million compared with the start of the year.

According to the Payment Bulletin 2024, this marks a 9 per cent increase in total reserves over the seven-month period. Total reserves include short-term debt, but the level of usable reserves is regarded as more significant for import-dependent economies.

MMA figures show usable reserves rose from USD 116 million in January to USD 213 million in July, an increase of USD 97 million, or 84 per cent.

Customs data indicates the import of essential goods requires an average of USD 66 million per month. Current reserves can cover approximately 3.2 months of essential imports. Economists, however, recommend maintaining reserves equivalent to at least six months of imports. Rising debt repayment obligations remain a concern.

Usable reserves by month:

Credit rating agencies including the World Bank, Moody’s, and Fitch have noted the improvement in reserves, citing changes to foreign exchange regulations that require resorts and tourism businesses to exchange US dollars with local banks.

MMA confirmed that USD 247.2 million was added to reserves as a result of this regulation, though USD 213 million of that amount was used to repay foreign debt.

In addition, USD 400 million was withdrawn by the Reserve Bank of India (RBI) under a currency swap agreement in October 2024. Repayment of this amount has been extended by six months. MMA also plans to draw on a further MVR 30 billion (USD 343 million) available under the swap arrangement should reserves decline later in the year.