Reserves will rise as Maldives Monetary Authority (MMA) will receive more foreign exchange due to these regulatory changes and a positive shift in reserves will be observed, Ministry of Finance said.
With changes in foreign exchange regulations, the government’s reserves are expected to increase to USD 705 million next year, according to the budget forecast.
The budget book projects that reserves will rise as Maldives Monetary Authority (MMA) will receive more foreign exchange due to these regulatory changes. A positive shift in reserves will be observed, Ministry of Finance said.
Under the new foreign exchange regulations issued by MMA in October, resorts are required to deposit USD 500 per tourist in a Maldivian bank, while guest houses must deposit USD 25 per tourist in a local bank every month.
Reserves are projected to stand at USD 654 million by the end of this year. MMA also secured a USD 400 million currency swap facility through the Reserve Bank of India (RBI) late last month to boost foreign exchange reserves. Official reserves were at USD 615 million at the end of October.
While proceeds from the currency swap facility are typically invested in foreign banks, MMA has allocated USD 120 million from the swap to Maldivian banks.
Official reserves stood at USD 590 million at the end of last year.
Despite the rise in official reserves, usable reserves fell by USD 17 million from the previous month, standing at USD 32 million. This marks the largest decline in usable reserves in the past three years.
Usable reserves dropped to USD 45 million in August, largely due to a significant increase in dollar expenditure.
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