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MMA increases US Dollar allocation for banks

Mariyam Malsa
06 October 2020, MVT 12:49
Aerial view of Maldives Monetary Authority (MMA). PHOTO/MIHAARU
Mariyam Malsa
06 October 2020, MVT 12:49

Maldives Monetary Authority (MMA), on Monday, increased the amount of US Dollars issued to banks operating in the country.

The central bank released a statement, noting that the higher allocation, which will remain fixed until the end of 2020, was introduced to reduce pressures on the local foreign currency market.

MMA also increased the amount of USD issued to the foreign exchange market via banks in April, May, June and July.

The ongoing COVID-19 pandemic resulted in widespread shortages of foreign currency available to businesses, following the halt in tourism and subsequent disruption of foreign currency inflow.

Despite the government's decision to reopen borders from July 15 onwards, tourist arrivals remain below pre-COVID figures, and pressures on the local foreign currency market persist.

However, MMA's statement highlighted certain indications of economic recovery, particularly noting the steady increase in the number of tourist arrivals. A total of over 18,900 holidaymakers having visited the country since borders were reopened.

As with numerous countries around the world, in the wake of the ongoing COVID-19 pandemic, Maldives closed its air and sea borders to tourist arrivals on March 27, halting the issuance of on-arrival visas until July 15.

The restrictions on international travel left Maldives' heavily tourism reliant economy in an extremely vulnerable state. In mid-April, the World Bank projected that Maldives would be the worst-hit economy in the South Asian region due to the pandemic.

The central bank earlier revealed that Maldives' usable reserve had depleted to USD 152.6 million by June. The reduction represents a 49 percent depletion compared to January's value of USD 311.3 million.

Overall, the Maldivian government estimates a shortfall of approximately USD 450 million (MVR 6.9 billion) in foreign currency and a state deficit of MVR 13 billion in 2020 as a result of the COVID-19 pandemic's impact on the tourism industry.

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