External reserves increase moderately in June 2024

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The Maldives external reserves increased moderately in June 2024 compared to May this year.

According to Maldives Monetary Authority (MMA), the external reserves reached USD 492.2 million in May 2024, while the reserves increased to USD 509.2 million in June.

However, external reserves for June is still a decline compared the corresponding month in 2023, during which it stood at USD 702.2 million.

With the decline in external reserves in annual terms, there are concerns that Maldives may face challenges to make payments for necessary imports in the future.

The Maldives state finances observe deficit spending year-on-year, owing to higher expenditure compared to revenues. This requires the government to take external and domestic loans for cashflow management of the state, which further dampens its fiscal strength.

Statistics showed that the Maldives debt-to-GDP ratio stood at 98% at the end of Q1-2024.

Meanwhile, IMF and the World Bank have warned Maldives may be headed towards an economic plight if it could not mitigate risks related to rising debt.

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