Maldives central bank warns of zero usable reserves in August
The finance ministry issued a letter last week asking companies to stop paying salaries in dollars.
Maldives central bank has forecast that the usable reserves of the country will be exhausted this month.
The purpose of the reserve is to import essential commodities such as oil and medicines. A country's foreign currency reserves are a measure of the country's economic and financial situation.
A copy of a letter sent by the Maldives Monetary Authority (MMA) to the finance ministry late last month expressed concern over the depletion of Maldives' usable reserves.
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The ministry has already sent the letter to some government companies that earn foreign currency
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The letter, in consolidation, asked the finance ministry to deposit foreign exchange earnings directly through the MMA and take measures to keep foreign exchange in the treasury
The MMA letter said that as of July 24, the official reserves stood at $365.44 million, while the usable reserves stood at $21.97 million. The letter states:
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According to estimates, usable reserves are expected to fall to $17.6 million by the end of last month
"In addition, according to the official reserve estimates prepared by the authority in July, usable reserves are expected to decline to $17.6 million by the end of July and will run out from August," the MMA said in a letter to the finance ministry.
The latest data released by the MMA shows the country’s reserves as of June. The figures show that as of June:
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Official reserves stood at $509.2 million
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Usable reserves stood at $66.9 million
The finance ministry issued a letter last week asking companies to stop paying salaries in dollars.
When asked about the letter, the MMA's media section said no such letter had been sent. Despite the MMA's claims, reliable sources have confirmed to Atoll Times that the letter was sent.
MMA governor Ahmed Munawwar did not respond to questions about the letter.
Maldives needs $70 million a month to import essential commodities. Therefore, the latest reserve numbers released by the MMA show that it is enough money to import goods for 0.9 months.
According to statistics, Maldives needs $508 million this year to repay foreign loans.
Fitch has downgraded Maldives' rating to CCC Plus as the country's official reserves are falling to a record low. It is the rating for countries with very low financial conditions and a high probability of defaulting on foreign debt.
