Maldives Sees Consecutive Decline in Usable Reserve

Maldives sees a drop in usable reserve for the second consecutive month, as the end of February 2023 reports a figure of $235 million, a decrease of $19 million compared to January 2023, where the usable reserve stood at $254 million.

It is noteworthy that the reserves also dropped by $13 million in January, compared to December 2022. Despite the decline in reserves, the government claims that the reserve position is good.

President Solih made a statement during the inaugural parliament session this year, stating that the government has ensured that the reserve can be maintained at a stable rate. Last year, the government entered into a currency swap agreement with the Reserve Bank of India and borrowed $200 million to improve the reserve position.

However, with the reserve position showing a consecutive decline, the situation is alarming. The Maldives' economy relies heavily on tourism, which suffered a severe setback due to the COVID-19 pandemic. The country's current account deficit is also increasing, which adds to the pressure on the reserve position.

The usable reserve of a country plays a crucial role in the overall financial stability of the nation. It helps in meeting the short-term financial obligations, supporting the balance of payments, and maintaining the confidence of investors and rating agencies.