The Maldives Monetary Authority (MMA), the central bank, has decided to also utilize the currency swap facility of 30 billion rupees (343 million dollars) obtained under an agreement with the Reserve Bank of India (RBI).
The MMA stated that they will begin using the 30 billion rupee facility towards the end of this year. The bank is currently making the necessary administrative preparations related to this.
This facility was arranged during President Dr. Mohamed Muizzu’s visit to India last October.
During that trip, India also renewed a currency swap facility of 400 million dollars.
That facility was drawn in October of last year. Since then, its duration has been extended twice.
The new facility will be drawn upon the expiration of the previous 400 million dollar facility.
Last year was one of the years when the reserves dropped to their lowest in recent Maldivian history. The reserves are declining due to the government’s need to cover fuel and other expenses, as well as an increase in debt repayment obligations. So far this year, 213 million dollars (3.3 billion rufiyaa) from the reserves have been used for debt repayment. The State Trading Organization (STO) has been given 274 million dollars (4.2 billion rufiyaa) from the reserves for importing fuel, staple foods, medicine, and medical equipment.
As of last June, the reserves stood at 832 million dollars. The usable reserves for that month were 202 million dollars.
To improve the state of the reserves, the MMA has made changes to the Foreign Currency Act, increasing the amount of dollars banks must deposit. The MMA reported that by the end of July, they had received 247.2 million dollars from banks as part of the required amount to be sold to the MMA.
