With the Maldives having to repay large foreign debts, the country's official reserves are projected to fall by 16.9 percent from the previous year to USD 817.17 million by the end of this year, according to the state budget proposed for next year.
At the end of last year, the Maldives' official reserves stood at USD 984.6 million.
The budget document notes that the main reason for the decline in reserves is that the state has had to repay large foreign debts at a time when oil and other commodity prices have risen on the global market. Of the USD 500 million sukuk repaid in April this year, USD 350 million was covered by the Sovereign Development Fund, while the remainder was paid from the official reserves.
The budget's reserve projections take into account changes in the global market, the measures being taken by the government to increase foreign currency earnings, monetary policies, and the foreign financing expected to be received.
Following amendments to the Foreign Exchange Act, eligible businesses are now required to convert 40 percent of their foreign currency earnings at banks. Some of this foreign currency is then sold to the central bank, helping to increase the reserves.
Leave a reaction