External reserves moderately increase in June 2024

During a press conference held to brief the media about public finances. -- (Sun Photo/ Fayaz Moosa)

The Maldives external reserves saw a moderate increment in June this year compared to May 2024.

According to statistics from Maldives Monetary Authority (MMA), the External Reserves stood at USD 492.2 million in May this year, which increased to USD 509.2 million by June end.

However, the official external reserves for June this year saw decline compared to the corresponding month in 2023, during which it stood at USD 702.2 million.

The external reserves saw its peak in April 2024, during which it reached USD 622.07 million, while May recorded the lowest for reserves.

While Maldives external reserves has decreased in annual terms, concerns have mounted that the country may face challenges to pay for necessary imports.

The Maldives public finances have periodically observed deficits owing to higher expenditure against revenues. Government seeks internal and external loans to maintain the cashflow for state’s administration and operations.

Figures indicate that the Maldives debt-to-GDP ratio reached 98 percent by the end of 2024 first quarter.

The recurring deficit spending pattern of the government, coupled with higher external and internal borrowings have led to various international financial authorities warning of potential debt risks Maldives face in future.

Organizations such as IMF and the World Bank have repeatedly warned Maldives is heading towards an economic plight if it fails to mitigate risks related to higher debts, and may face further challenges in servicing the debts in the future.

In light of more recent warnings, and a crediting ratings downgrade by Fitch Ratings recently, the Maldives government have begun nationwide efforts to cut its expenditure with stringent measures.

Earlier, the government announced it will be cutting its spending by revising the ticketing policy for official trips and by capping political appointees.