The Finance Ministry has confirmed that the official reserves are expected to remain at USD 605 million by 2024. This announcement follows the presentation of the 2024 budget in Parliament, which outlines changes in the country’s financial situation.
As per the budget, the official reserves are projected to decrease from USD 832.1 million at the end of 2022 to USD 618.4 million by the close of 2023. This decline is attributed to increased costs associated with crude oil imports, influenced by rising global oil prices.
The official reserves are estimated to recover slightly, reaching USD 605.7 million by the conclusion of 2024. These figures are based on data from the Maldives Monetary Authority (MMA) as of October 26, 2023.
The budget report also highlights the current account deficit, expected to be USD 1 billion, equivalent to 16.3 per cent of the Gross Domestic Product (GDP) in 2022. This deficit is predicted to increase to USD 1.5 billion by 2023, maintaining a similar percentage of GDP. By 2024, the projection indicates a further increase to USD 1.39 billion, representing 18.8 per cent of the GDP.
The decrease in the current account deficit in 2023 is primarily attributed to a reduction in projected revenue from the tourism sector compared to 2022. This reduction is linked to a rise in revenue collections in the sector in December of the previous year due to higher Tourism Goods and Services Tax (TGST) rates introduced at the beginning of that year, according to the budget’s analysis.
In 2022, the tourism sector generated revenue of USD 4.49 billion. However, this is expected to decrease to approximately USD 4.19 billion by 2023, with an estimated recovery of USD 4.6 billion in 2024.
Additionally, the budget anticipates an increase in the cost of services from abroad, expected to rise from USD 1.63 billion in 2023 to USD 1.67 billion in 2024.
Based on data related to imports and exports, the value of goods imported in 2022 amounted to USD 3.31 billion. This figure is projected to reach USD 3.37 billion by 2023, marking a 1.9 per cent increase compared to 2022.
Importing goods in 2024 is forecasted to reach USD 3.54 billion, although the budget suggests this figure might be slightly lower than initially expected for that year. These financial projections have been presented in light of various economic factors influencing the Maldives’ fiscal situation.