Growth in the Maldives’ money supply accelerated at the start of 2026, reflecting rising bank deposits, stronger credit activity, and continued accumulation of foreign assets within the financial system. The latest economic update from the Maldives Monetary Authority indicates that monetary conditions remain expansionary even as broader economic growth moderates.
Reserve money, often referred to as base money, expanded by 14 percent by the end of January 2026 following a 17 percent increase recorded in December. The increase was largely driven by higher net foreign assets held by the central bank. Foreign asset accumulation continued to outpace the rise in foreign liabilities, strengthening the central bank’s balance sheet. At the same time, net domestic assets declined, mainly due to a reduction in the central bank’s net claims on the government.
The broader measure of money in the economy also expanded rapidly. Broad money, or M2, grew by 20 percent year on year by the end of January, only slightly slower than the 21 percent recorded a month earlier. This expansion was largely driven by a rise in time deposits denominated in both local and foreign currency. Transferable deposits and savings deposits in local currency also increased during the period, indicating higher liquidity within the banking system. Currency circulating outside banks also rose, suggesting continued expansion in overall cash availability in the economy.
From the perspective of the banking system’s balance sheet, the growth in broad money was mainly supported by an increase in net domestic assets. Commercial banks increased their claims on the central government while credit to the private sector continued to expand. Net foreign assets also increased, reflecting continued foreign asset accumulation across the financial system.
Credit growth in the private sector remained steady. Loans issued by commercial banks to private borrowers expanded by 13 percent annually by the end of January 2026, unchanged from December. Lending growth remained concentrated in several key sectors of the economy, particularly tourism, construction, commerce, real estate, and personal lending.
The tourism sector continued to account for the largest share of bank lending, representing roughly 35 percent of total private sector credit. Credit extended to tourism businesses grew by 13 percent over the year, driven by financing for working capital as well as new resort development and renovation projects. This reflects continued investment activity within the country’s dominant economic sector.
Alongside monetary expansion, the country’s external liquidity position also improved. Gross international reserves rose to approximately USD 1.0 billion by the end of January 2026, increasing from US$983 million in December and significantly higher than the USD 708 million recorded a year earlier. This represents an annual increase of about 45 percent, strengthening the Maldives’ external buffer against potential foreign exchange pressures.
The latest monetary indicators point to a financial system characterised by expanding liquidity, steady credit growth, and stronger reserve positions. The continued growth in deposits and bank lending suggests that domestic financial activity remains robust, even as broader economic indicators such as tourism occupancy and global conditions introduce new uncertainties.
While expanding money supply can support investment and economic activity, it also places greater emphasis on managing liquidity and ensuring that credit growth remains aligned with sustainable economic development. For policymakers, the key challenge will be maintaining financial stability while supporting continued growth in sectors that drive the Maldivian economy.
