Maldives’ official reserve assets rise by 0.9%, but usable reserves drop by 9.6%

The Maldives’ official reserve assets rose by a slight 0.9 percent in August, while usable reserves dropped sharply by 9.6 percent, according to the latest information released by the Maldives Monetary Authority (MMA).

The reserve data shared by MMA on Tuesday shows the country’s official reserve assets stood at USD 643.8 million as of the end of August – marking a 0.9 percent increase from the USD 638 million the previous month.

Meanwhile, usable reserves declined from USD 221.9 million to USD 200.6 million.

The MMA attributed this sharp decline to the central bank selling more foreign currency than it received in August.

The MMA states that it increased the US dollars it sold to banks by 13.4 percent in August compared to July, as part of efforts to boost access to foreign currency through the banking system, and ease the foreign exchange market.

Meanwhile, the foreign currency it received from the Maldives Inland Revenue Authority (MIRA) as tax and non-tax revenue declined by 14.3 percent compared to August.

The Maldives recently revised the Foreign Currency Act, raising the mandatory US dollar exchange requirement for Category A establishments - resorts, integrated tourist resorts and private islands – from 20 percent to 40 percent of gross monthly revenue.

The amendments also raised the threshold for mandatory foreign exchange by non-tourism sector businesses earning dollar revenue from USD 15 million to USD 25 million per annum. Such businesses are required to exchange 40 percent of the monthly revenue in general, but seven percent if its 100 percent Maldivian-owned.

Meanwhile, Category B establishments - guesthouses, hotels, liveaboards - are required to exchange 20 percent of gross monthly revenue or USD 25 per tourist.

The new amendments, which took effect on October 1, also prohibit the advertisement or promotion of foreign exchange at rates exceeding the official rates set by the central bank. The disclosure, publication, or dissemination of black-market exchange rates through digital platforms or any other medium is now punishable with fines of up to MVR 500,000 for individual offenders and up to MVR 5 million for legal entities or registered businesses.

The government expects the changes to effect positive changes to the Maldivian economy as soon as next month.