Usable reserve drops to USD 73 million, down by USD 42.8 million

The usable reserve of Maldives has decreased by a significant USD 42.8 million in just one month, leaving the balance at USD 73.1 million, according to the latest monthly update by the Maldives Monetary Authority (MMA) published on 30 June 2024.

According to the figures, the official reserve assets of the country were at USD 622.1 million in April this year, leaving USD 113.6 million as usable reserves after deducting USD 508.5 million for planned outflows.

However, in May, the official reserve assets declined to USD 492.2 million, marking a 20.8 percent decrease. This resulted in the usable reserves plunging to USD 73.8 million after accounting for the planned outflow of USD 419.1 million, which is only sufficient for one month's import of necessities such as staples, fuel, and medication.

This is a 50 percent drop from May 2023, where usable reserves stood at USD 147.7 million. In contrast, this reserve was at USD 178.7 million by the end of 2023.

While official reserve assets have dropped to an all-time low of USD 492.2 million, the lowest point for these reserves in 2023 was in October, at USD 552.2 million.

This comes as Minister of Finance Dr Mohamed Shafeeq revealed that the government is facing significant challenges in seeking financing to deal with this year's budget deficit of MVR 14 billion.

While this year's total budget stands at MVR 49.8 billion, seventy percent of this amount is allocated to recurrent costs. As of now, MVR 18 billion has been expended from the budget, while MVR 15 billion has been generated as revenue.

In light of the country's economic situation, the government of Maldives is now implementing serious cost-cutting measures, which include reducing the number of political appointees and refraining from participating in major celebratory events on various occasions.