USD 213 million drawn from reserves to repay state debt

Maldives Monetary Authority (MMA) has revealed that USD 213 million (MVR 3.3 billion) was withdrawn from the state reserves by July this year to service government debt.

This is a 60 percent increase compared to the same period in 2024.

In a statement, central bank also noted that USD 274 million (MVR 4.2 billion) from reserves had been used this year to fund essential imports such as fuel, staple foods, medicines, and medical supplies.

Foreign exchange inflows to the reserve are largely generated through tourism-related taxes and fees. According to the MMA, the government’s foreign currency earnings for the first seven months of 2025 were 30 percent higher than in the same period last year.

“Under the Foreign Exchange Act, banks have submitted a total of USD 247.2 million to the MMA from businesses required to exchange foreign currency through the formal banking system,” the statement read.

MMA also reported that USD 217 million had been sold through banks this year for private sector use and public needs, including education, medical treatment, and international travel.

As of June, gross reserves stood at USD 832 million, with usable reserves at USD 202 million.

MMA noted that reserves had declined steadily since 2021, falling to USD 371.2 million by September 2024. However, they began to recover due to improved tax collection, stronger enforcement of foreign exchange laws, and currency swap agreements.

From 2017 to 2021, fuel imports accounted for an average of 33 percent of total imports. Between 2022 and 2024, this rose sharply to 49 percent.

MMA has significantly increased the sale of US dollars through the banking system to meet the foreign debt obligations of the government and state-owned enterprises, and to facilitate private sector and public foreign exchange needs.

The government has faced challenges in securing foreign financing as external debt levels measured as a proportion of GDP, have risen sharply in recent years.