The Maldives’ monetary landscape in July 2025 revealed mixed signals, with reserve money contracting while broad money and private sector credit continued to expand, according to the latest Economic Update from the Maldives Monetary Authority (MMA).
Reserve money (M0) declined by 2% at the end of July, marking the second consecutive monthly fall. The drop was largely driven by a reduction in net foreign assets, which offset gains in net domestic assets. The decline reflects the impact of increased foreign liabilities, notably the USD 400 million swap secured from the Reserve Bank of India in October 2024.
In contrast, broad money (M2) grew by 13% in July, up from 11% in June. This expansion was supported by higher transferable deposits in local currency, alongside increases in time and savings deposits. On the sources side, growth was primarily fuelled by a rise in net domestic assets, especially commercial banks’ claims on the central government and increased credit to the private sector. Net foreign assets also contributed, as foreign asset accumulation outpaced liabilities.
Credit to the private sector maintained steady growth, registering an annual increase of 6% in July, unchanged from the previous month. Personal loans led this expansion with a notable 23% rise, particularly through credit cards and consumer durable financing. Real estate and commerce also saw increases, while credit to construction remained subdued. The tourism sector, which accounts for the largest share of bank credit, recorded a marginal decline of less than 1%, mainly due to reduced working capital lending, even as financing for new resort projects and renovations grew.
The MMA update also noted that interest rates remained broadly stable during the review period.
Overall, while the contraction in reserve money signals pressures from foreign liabilities, the sustained growth in broad money and private sector credit points to continued domestic demand, underpinned by household borrowing and government financing needs.
