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Gross international reserves

Maldives' Usable Foreign Reserves Dip to $148M, Enough for Only 45 Days of Imports

MALE, Maldives — The Maldives Monetary Authority (MMA) reported that the usable foreign reserve of the nation was just $148 million USD by the end of May 2023, marking a drastic depletion in the reserves. The amount is sufficient to cover just 45 days of imports.
The total reserve by the end of May stands at $748 million USD. The last time reserves dwindled this low was in October 2022, when it dipped to a worrying $105 million USD. The government swiftly acted, conducting a currency swap with the Indian Central Bank and issuing a bond to the State Bank of India. Consequently, the reserves bolstered back up to $219 million USD by November 2022, ending the year on $267 million USD.
However, 2023 has seen a steady decline in the reserve. Starting with $253 million USD in January, the reserves fell to $235 million in February, $200 million in March, and a sharp drop to $151 million in April, settling at $148 million by the end of May. The persistent monthly drop indicates an increasing pressure on the Maldivian financial system and the potential risk of instability.

In May 2022, the usable reserves were a healthier $369 million USD, so the current standing at $148 million this year marks a substantial decrease of almost 60%. This contrast underlines the significant reserve depletion over the course of a year and puts into question the government's assertion of a robust economic situation.

The main cause of the reserves' depletion is the government's increased printing of the Maldivian Rufiyaa, which has led to an excess of the currency in the economy. To maintain the Rufiyaa's fixed exchange rate, the government has had to use dollars from the central bank, consequently shrinking the foreign reserves.

Despite the official exchange rate being 15.42 MVR per USD, it is now trading at 17.5 Rufiyaa in the black market, indicating the mounting pressure on the currency.

These figures put a spotlight on the Maldivian government's economic management and its response to preserve the financial stability of the country amidst this ongoing depletion of foreign reserves. While the government insists on the economy's good health, these figures suggest a need for prudent measures to prevent potential economic disruptions.