The Maldives Monetary Authority (MMA) has announced the country's national reserve is expected to see improvements this month, citing positive developments in the nation's economic and financial situation.
In an interview with PSM News, MMA revealed that an agreement signed in 2019 between the authority and the Ministry of Finance allowed the central bank to exchange dollars deposited in the Sovereign Development Fund (SDF) for Maldivian Rufiya, including them in the usable reserve. However, this arrangement ended in December 2023. MMA now retains the dollars in the SDF without exchanging them, with the fund currently holding an available balance of USD 65 million.
As of the end of July, the central bank reported that the state's usable reserve stood at USD 45 million, excluding the USD 65 million held in the SDF. MMA also noted that deposits into the SDF are expected to surpass forecasts due to recent measures taken by the government to increase contributions to the fund.
The central bank highlighted the anticipated exponential growth of the Maldives' tourism industry, predicting that this will have a positive impact on the national reserve. Additionally, the government is actively seeking financing from foreign entities to support the foreign exchange needs of the state and state-owned companies.
MMA further disclosed its ongoing efforts to enhance foreign currency liquidity through currency swap arrangements, which have been employed in recent years. One such swap line is expected to provide up to USD 400 million in financing. In 2023, USD 100 million from a similar arrangement was used to bolster the reserves.
Since the appointment of Governor Ahmed Munawar, the central bank has been working closely with the Ministry of Finance and other relevant authorities to improve the economy and financial situation. MMA expressed confidence that these collaborative efforts are yielding positive results and will help overcome the challenges facing the Maldivian financial system.