The gross foreign exchange reserves continued their downward trajectory for the fourth consecutive month in July, according to the latest statistics released by the Maldives Monetary Authority (MMA).
Data from the central bank reveals that gross reserves stood at USD 638 million by the end of last month. This is a decline of USD 48.7 million compared to the figures recorded at the end of June.
The depletion of gross reserves has also impacted usable reserves, which fell to USD 22.8 million by the end of July. This marks a decrease of USD 27 million from the previous month.
Following record growth in reserves during the first quarter of this year, the sudden decline began in April. This downturn was caused by the USD 500 million sukuk repayment and the conclusion of a USD 400 million currency swap agreement with the Reserve Bank of India.
While these payments averted a potential sovereign default, the data indicates that the reserves have remained under persistent strain ever since. This pressure has been further exacerbated by global and domestic economic slowdowns linked to the ongoing conflict in the Middle East.
Usable Reserves (2026)
- January - $301.4 million
- February - $337.2 million
- March - $409 million
- April - $244.2 million
- May - $260.8 million
- June - $248.9 million
- July - $221.8 million
Despite these external challenges and mounting foreign debt obligations, there are growing concerns over the government's inability to implement meaningful austerity measures to curb the narrowing reserves.
Financial experts warn that unless robust measures are taken to reduce expenditure and increase state revenue through higher tourist arrivals, the reserves will continue to weaken, posing further risks to the national economy.
In response to the fiscal crunch, rather than cutting costs, the government has proposed amendments to the GST Act to transition tourism taxation to a destination-based principle. This move aims to tax foreign travel intermediaries that send tourists to the Maldives. The government estimates this change will generate over USD 100 million in additional annual revenue.
