According to the latest data from the Maldives Monetary Authority (MMA), the country’s total reserves amount to USD 542 million as of March, providing around two months’ worth of import cover.
While the MMA ceased publicly disclosing usable reserves in 2022, the Maldives are estimated to currently maintain approximately USD 161 million (MVR 2.4 billion) in usable reserves.
As such, the Maldives faces a short-term debt of around USD 381 million (approximately MVR 6 billion). With the country’s monthly import expenditure averaging USD 66 million, the usable reserves cover only about two months of imports.
Traditionally, a reserve buffer of three to six months’ worth of imports is ideal for mitigating financial risks and ensuring stability. However, the current status falls short of this benchmark, indicating potential vulnerabilities in the Maldives’ economic resilience.
Comparatively, last year witnessed a notable decline in usable reserves, with the Maldives’ situation mirroring that of Sri Lanka, where reserves dwindled to USD 126 million amid economic challenges.
The Maldives government faces a substantial debt burden inherited from previous administrations. Before President Dr. Mohammed Muizzu assumed office, total reserves stood at USD 551 million, with unpaid bills and looming debt obligations weighing on the nation’s finances.
Efforts to address this financial strain have seen significant initiatives, including the recent repayment of a USD 50 million treasury bond issued to the State Bank of India (SBI). This bond, listed by the previous government in January last year, carried a 4.5% interest rate and had reached its maturity deadline.
However, despite such measures, the Maldives grappled with a substantial debt burden of MVR 124 billion last year, equivalent to 115% of the national GDP.
Likewise, external debt reached MVR 51 billion, and domestic debt stood at MVR 73 billion.
