Central Bank, Maldives Monetary Authority (MMA) says that at the end of January the official reserves were at US$ 476 million.

MMA statistics show that usable reserves were at US$ 201.5 million, with an increase of one percent month on month. However, this a decrease of one percent on an annual basis.

The Government had resorted to taking a loan of US$ 100 million from India to settle the reserves situation in the country. The loan was carried out under a swap arrangement, which will facilitate the transfer of local currency of a nation with another currency, such as US dollars, under a set agreement. This a transaction applicable to all SAARC nations.

MMA said the transaction was carried out under this measure, adding that this was the first time Maldives had taken out such a facility from Indian Reserve Bank.

The US$ 100 million is roughly MVR 1.5 billion, taken on a three-month maturity period at an interest rate of three percent. Therefore, MMA has to pay out the principle amount of MVR 1.5 billion and an additional MVR 46 million as interest. MMA added that the payment will be made in a bullet payment or a one-off payment.

Therefore, when MMA has to pay back roughly MVR 2 billion.

Latest statistics by MMA show that at the end of December, the reserves were at US$ 200 million. While US$ 100 million had been taken to manage the reserves, last November MMA had also sold US$ 140 million as corporate bonds to Airports Company. MMA noted that this amount had not been included in MMA usable reserve as the bonds were foreign currency bonds.

While the cycle of taking loans to repay loans is repeating, the current account deficit for this year is expected to hit US$ 892.1 million. Last year, this figure was at US$ 666.7 million. Additionally, the Government has also passed to sell off US$ 200 million in sovereign bonds to manage major state projects and state expenses.