Statistics from the central bank show that the official reserves stood at 832 million dollars at the end of the first 6 months of the year. According to the monthly statistics released by the central bank, Maldives Monetary Authority (MMA), the level of official reserves at the end of June this year has increased compared to May. At the end of June, the official reserves stood at 832.4 million dollars. In May, the official reserves were at 815.8 million dollars. Thus, comparing month to month, this is a 2 percent increase.
Although MMA statistics show an increase in official reserves, the usable reserves have decreased. Accordingly, at the end of June, the usable reserves stood at 203 million dollars. This amount was at 217.9 million dollars in the previous month of May. This is a 6.8 percent decrease. Despite the increase in official reserves, the usable reserves have decreased due to an increase in short-term foreign currency obligations. For these obligations, while 742.5 million dollars were paid in May, 774.5 million dollars have been paid in June.
As part of the government’s efforts to bring positive changes to the state’s reserves, a new law on foreign currency has been introduced to strengthen the foreign currency reserves. Under this law, businesses in the tourism sector must convert 20 percent of their income or the per capita amount for each tourist visiting their establishment to banks. Banks must sell 90 percent of the dollars converted to them to the central bank.
60 percent of the dollars converted by banks to MMA is used for various government needs and to increase reserves. The additional 30 percent converted by banks is sold back to the banks every week. Banks use this money to lend to businesses and to meet other foreign currency obligations.
