MMA Highlights Stronger FX Inflows Amid Strategic Use of Reserves

The Maldives Monetary Authority (MMA) has disclosed that USD 213 million (MVR 3.3 billion) was withdrawn from the state reserves by the end of July 2025 to meet the government's debt servicing obligations—a 60 percent increase compared to the same period last year.

In a statement released this week, the central bank highlighted the growing pressure on the nation’s foreign reserves, citing a combination of debt repayments, essential import expenditures, and continued foreign currency demand from the private and public sectors.

Alongside the debt payments, an additional USD 274 million (MVR 4.2 billion) from reserves has been used in 2025 to finance critical imports, including fuel, staple foods, medicines, and medical supplies. The data underscores the Maldives’ ongoing vulnerability to external shocks, with the central bank actively intervening to stabilise key supply chains.

Despite these withdrawals, foreign exchange inflows into the reserve have seen an uptick, largely due to tourism-related taxes and fees. According to the MMA, the government’s foreign currency revenue in the first seven months of 2025 recorded a 30 percent increase compared to the same period in 2024.

Under the Foreign Exchange Act, banks submitted a total of USD 247.2 million to the central bank from businesses mandated to convert foreign currency through formal channels. The MMA also reported selling USD 217 million through banks this year to cater to private sector and public foreign exchange needs, such as education, medical treatment, and overseas travel.

As of June 2025, the Maldives’ gross official reserves stood at USD 832 million, with usable reserves—which exclude committed funds—down to USD 202 million. This reflects a mixed picture of improving inflows amid persistent fiscal pressure.

The central bank noted that reserves had been on a declining trend since 2021, reaching a low of USD 371.2 million in September 2024. However, recent improvements are credited to enhanced tax collection, stronger enforcement of foreign exchange regulations, and currency swap agreements with strategic partners.

Fuel imports have played a significant role in shaping reserve dynamics. Between 2017 and 2021, fuel accounted for 33 percent of total imports, but this surged to 49 percent between 2022 and 2024, amplifying the Maldives’ exposure to global energy price volatility.

The MMA reiterated its commitment to increasing dollar sales through the banking system, particularly to meet the foreign debt obligations of the government and state-owned enterprises, while also supporting private sector access to foreign currency.

The government's struggle to secure new foreign financing remains a concern, especially as external debt levels—measured as a share of GDP—have risen sharply in recent years. The MMA’s latest figures offer a sobering insight into the delicate balancing act the Maldives faces in managing its external obligations while maintaining essential imports and supporting a dollar-dependent economy.