The Maldives would have exhausted its usable reserves by the end August, the Maldives Monetary Authority (MMA) has projected in a letter to the Ministry of Finance, local media sources say. The main purpose of the foreign reserves, used also to gauge the country’s economic and financial standing, is for the guaranteed import of essential commodities such as fuel and medicines.
A communique, currently circulating in local media, sent by the MMA to the Ministry of Finance late last month expressed concern over the complete depletion of the country’s usable reserves. The Ministry is reported to have already shared the document with the state owned enterprises (SOEs) which bring in foreign currency — the communique urged that state agencies take measures to retain foreign currency earnings directly through the MMA.
The document reportedly states that, as of 24 July, the official reserves stood at US$365.44 million, with useable reserves at US$21.97 million, and that, according to estimates, usable reserves were expected to fall to US$17.6 million by the end of July.
The latest data released by the central bank shows the country’s reserves, as of June, stood at US$509.2 million with usable reserves at US$66.9 million, thus prompting the Finance Ministry letter advising companies to stop paying salaries in dollars.
The MMA, when asked about the communique by local media, said no such letter had been sent, however, reliable sources have confirmed to local media sources that the advisory was sent — MMA’s newly appointed Governor, Ahmed Munawar, also did not respond to queries.
The Maldives requires approximately US$70 million a month to import essential commodities such as fuel, medicine, and staples, which, according to the latest figures, indicates a significant shortfall.
The Maldives will need approximately US$508 million to meet foreign debt obligations this year.
Fitch Ratings, two months ago, downgraded the Maldives’ rating from a ‘B-‘ to ‘CCC +’ as the country’s official reserves continued to fall in record levels. ‘CCC’ National Ratings, according to Fitch, denote a very high level of default risk relative to other issuers or obligations in the same country or monetary union.