Days after the Maldives Monetary Authority (MMA) sent a warning letter to the Finance Ministry warning about exhausting usable reserves of the country, the state’s usable dollar reserves have actually run out, reported Adhadhu, a local media outlet.
This is the first time in the history of Maldies that its reserves have gone to negative. The MMA and the Finance Ministry failed to comment on the issue, but Adhadhu claims to know that the country’s remaining dollar reserves have been exhausted on Wednesday, 21st August.
Two different reputable sources confirmed to Adhadhu that usable dollar reserves are currently negative. As per the report, the government held a USD 25 million oil payment due, and the reserves could run out and go negative if the bill was paid.
The useable dollar reserve in Maldives is the amount of money held by the government to repay loans and spend on critical imports. The reserve is made up of dollar revenue received by the Maldives Inland Revenue Authority (MIRA), grants from the state, and budget support. The reserve is also used to send funds to students studying abroad, as well as to sell dollars to Maldivians travelling abroad. It is also used to distribute cash to banks and government entities.
According to the most recent data given by the MMA as of July 24, the official reserves stood at $365.44 million, while the usable reserves of the country stood at $21.97 million. Experts who talked with Adhadhu suggested the Sovereign Development Fund (SDF) may need to be used if the state’s dollar reserves run out.
However, both the government and the MMA dismiss the prospect of encountering such a circumstance. The Finance Ministry and the MMA told several local media sources that the situation would not deteriorate and that the reserves would stabilize by the end of this month.
“The authority continues to publish reserve data on a monthly basis. Maldives’ usable reserves are expected to increase by August from the level at the end of July,” the MMA said in the statement.
On Monday, 19th August the finance ministry issued a letter requesting that companies stop paying salaries in dollars. Maldives requires $70 million each month to import vital supplies. As a result, the latest MMA reserve data reveal that there is enough money to import products for 0.9 months. According to data, the Maldives requires $508 million this year to repay its foreign loans.
