Download Monthly Economic Review - Maldives Monetary Authority

Outlook for 2017
After a weaker than expected ou urn in 2016, the real GDP1 growth is estimated to increase to 4.7% in 2017, from an
estimated 3.9% in 2016. This is to be driven by the expansion of the construction sector, stemming from large infrastructure
projects planned for 2017. Tourism sector is also expected to pick up pace in 2017, which will boost overall economic
growth.
The fiscal deficit2 is projected to decrease to MVR303.7 million (0.5% of GDP) in 2017 from an estimated MVR4.3 billion
(7.4% of GDP) in 2016. Meanwhile, according to the balance of payments forecasts of March 2017, the current account
deficit is projected to contract to US$650.5 million (16% of GDP) in 2017 from an estimated US$840.0 million (22% of GDP)
in 2016.
Tourism
During May 2017, total tourist arrivals increased
marginally in annual terms and totalled 93,491.
This reflected an increase in arrivals from the Asia
and Pacific region, which offset a slight decline in
Key Tourism Indicators
thousands
arrivals from the European market. The decline in
the European market was due to a significant fall
in arrivals from some of the key markets from the
region, especially from the Germany, France, and the
UK. This was however offset by a growth in arrivals
from other major European markets such as Russia
and Italy. Increase in the arrivals from the Asia Pacific
region was partly offset by a significant fall in arrivals
from China. During the month, the total bednights
increased by 6% in annual terms and the average
duration of stay also increased from 6.2 days in May
2016 to 6.5 days. Reflecting the annual increase in
1 GDP growth rates are based on market prices.
2 According to the national budget for 2017 submi ed to the Majlis.
Source: Ministry of Tourism
annual percentage change
Monthly Economic Review
June 2017
operational bed capacity of resorts, the occupancy rate
of the resorts dropped to 61% in May 2017 from 67%
in May 2016.
Fisheries
Fish Exports
annual percentage change
In May 2017, fish purchases made by fish processing
companies
totalled
2,921.0
metric
tons.
This
represented a monthly and an annual decline of 47%
and 35%, respectively.
During May 2017, the volume of fish exports registered
a considerable growth of 78% while earnings from
fish exports also increased by 28%, in annual terms.
The growth in both the volume and earnings of fish
exports was almost entirely due to the significant
increase in frozen yellowfin tuna and frozen skipjack
tuna exports. Meanwhile, the volume of fish export
and earnings from fresh or chilled yellowfin tuna
Source: Maldives Customs Service
IMF Commodity Price Index
annual percentage change
exports decreased during the review period.
Global Prices
During May 2017, the International Monetary Fund
commodity price index registered an annual increase
of 8%, while it registered a decline of 2% in monthly
terms. The annual increase largely stemmed from
a hike in metal and oil prices as well as a slight
increase in food prices. In monthly terms, prices of
food increased. However, this was entirely offset by a
decrease in oil and metal prices.
The price of crude oil3 stood at US$49.9 per barrel at
the end of May 2017, recording a growth of 9% in
Source: International Monetary Fund
2
annual terms, but a decline of 4% in monthly terms.
3 Monthly average of Brent, Dubai Fateh and West Texas
Intermediate.
Monthly Economic Review
June 2017
In ation
The rate of inflation (measured by the annual
percentage change in the Consumer Price Index
Consumer Price Index
annual percentage change
[CPI]4) accelerated further to 4.6% at the end of
May 2017 after registering 4.5% at the end of April
2017. This was mainly due to an increase in prices
of staple food items; fish; cigare es; and an increase
in housing rentals and electricity price. As for the
monthly percentage change in the CPI, it registered
0.2% in the review month. While prices of vegetables,
fruits, fish, and housing increased during the month,
this was partly offset by decreases in prices of staple
food items, furniture and household equipments.
Source: National Bureau of Statistics
Public Finance
According
to
monthly
Government Revenue and Expenditure
government
revenue
millions of ru yaa
and expenditure data5, total revenue (excluding
grants) during October 2016 amounted to MVR1.2
billion, which was an annual increase of MVR143.9
million. Meanwhile, total expenditure (excluding
amortisation) rose by MVR399.2 million in annual
terms and amounted to MVR1.9 billion in October
2016. The increase in total revenue during October 2016
was entirely driven by strong tax revenues. This was
largely owing to revenue from the newly introduced
green tax6 as well as the increase in revenue from
general goods and services tax. Meanwhile, non-tax
Source: Ministry of Finance and Treasury
revenue registered a decline which was mainly due
to a decrease in resort lease period extension fees.
As for the increase in expenditure, this was due to a
rise in both current and capital expenditure during
the review period. The annual increase in capital
4 Inflation analysis is based on CPI data at the national level.
5 Data relating to public finance was available only upto
October 2016 at the time of compilation of this report. Monthly
income and expenditure data are subject to change and may
vary from month-to-month as public accounting system data
are updated regularly. Data for October 2016 was revised on 15
December 2016.
6 The green tax on tourists visiting Maldives was introduced
during November 2015.
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Monthly Economic Review
June 2017
expenditure mainly reflected the higher expenditure
on the public sector investment program while the
increase in current expenditure was mainly due to
the rise in interest payments on government debt.
Government Securities
Treasury Bills and Treasury Bonds
millions of ru yaa
The total outstanding stock of government securities,
which includes treasury bills and treasury bonds,
remained largely unchanged in monthly terms and
totalled MVR23.4 billion at the end of May 2017. The
investment in treasury bills increased marginally by
1% (MVR157.5 million), while investment in treasury
bonds largely remained unchanged during the
review month. The monthly increase in treasury bills
investment was due to an increase in commercial
banks investment in treasury bills, which offset
the decrease in such investment by other financial
Source: Maldives Monetary Authority
corporations.
Treasury Bills by Holder
In annual terms, the outstanding stock of government
millions of ru yaa
securities registered a growth of 10%, owing to
a significant increase in the outstanding amount
of treasury bonds and a notable increase in the
outstanding treasury bills. The outstanding treasury
bonds and treasury bills rose by 19% (MVR1.5 billion)
and 5% (MVR612.2 million), respectively. The growth
in treasury bills was due to the increase in treasury
bills holdings by the MMA and commercial banks
which offset the decrease in such investment by
other financial corporations. Meanwhile, the growth
Source: Maldives Monetary Authority
4
in treasury bonds largely reflected the conversion of
part of the treasury bills to treasury bonds.
Monthly Economic Review
June 2017
Interest Rates of Treasury Bills
Interest Rates of Treasury bills
percent
Treasury bills of all maturities continue to be issued
under a tap system since they were reverted back in
the year 2014. Since the rates on 28-, 91-, 182- and
364-day treasury bills were lowered to 3.50%, 3.87%,
4.23% and 4.60%, respectively in October 2015, it has
remained unchanged up until the review month.
Broad Money
The annual growth rate of broad money (M2) further
declined to 4%, after recording an annual decline of
Source: Maldives Monetary Authority
Determinants of Broad Money
annual percentage change
3% at the end of April 2017, and stood at MVR31.2
billion at the end of May 2017. This was mainly
contributed by an annual decrease in the net foreign
assets (NFA) of the banking system, largely owing to
a fall in the NFA of the MMA. However, the decrease
in NFA of the banking system was partly offset by
the increase in net domestic assets (NDA), owing to
investments in a corporate bond issued by a public
non-financial corporation.
Source: Maldives Monetary Authority
Monetary Base
The annual growth rate of the monetary base (M0)
Determinants of Monetary Base
annual percentage change
decreased by 3% at the end of May 2017, after
recording an annual decline of 22% at the end of April
2017, and amounted to MVR10.9 billion at the end of
the month. The fall in M0 was driven by a significant
annual decline in the NFA of the MMA which offset
the annual growth in the NDA of the MMA.
Source: Maldives Monetary Authority
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Monthly Economic Review
June 2017
Monetary Operations
millions of ru yaa
Monetary Operations
The two main instruments available to the MMA to
absorb excess liquidity in the banking system are the
Overnight Deposit Facility (ODF) and the open market
operations (OMO). However, the OMO continue to
remain suspended since May 2014 because the excess
liquidity in the system is absorbed by the commercial
banks’ continuous and persistent placement of these
funds in the ODF. In May 2017, the total liquidity
absorbed averaged MVR2.6 billion, which was a
decline of MV803.2 million and MVR820.5 million in
Source: Maldives Monetary Authority
both monthly and annual terms, respectively.
Imports and Exports
Imports and Exports
millions of US dollars
During May 2017, total merchandise exports rose
by 56% (US$11.6 million) in annual terms and the
expenditure on imports increased by 4% (US$8.3
million). The growth in exports was due to a significant
increase in re-exports and a 29% increase in domestic
exports. The increase in domestic exports was mainly
due to a growth in earnings from frozen skipjack
tuna and frozen yellowfin tuna despite a decrease in
earnings from fresh or chilled yellowfin tuna exports.
The annual growth of import expenditure resulted from
an increase in import of petroleum products, mainly
Source: Maldives Customs Service, Maldives Airports Company Limited, Gan
International Airport
diesel. The increase in import of construction related
items; machinery and mechanical appliances; and food
items also contributed to the annual growth in total
imports. In contrast, import of transport equipment
declined during the period.
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Monthly Economic Review
June 2017
Gross International Reserves
Gross international reserves (GIR) stood at US$603.5
million at the end of June 2017, which is a decline
of 3% in annual terms although it reflected a 13%
increase in monthly terms. Usable reserves amounted
7
Gross International Reserves
millions of US dollars
to US$248.8 million at the end of June 2017, registering
a monthly and an annual increase of 66% and 15%,
respectively. This largely reflected the proceeds
from a sovereign bond issued by the government in
the international market. However, this was partly
offset by the repayment of the foreign currency swap
agreement between the Reserve Bank of India and the
MMA.
Exchange Rate
With effect from 11 April 2011, the Maldivian rufiyaa
was allowed to fluctuate within a horizontal band of
20% on either side of a central parity of MVR12.85
Source: Maldives Monetary Authority
Bilateral Exchange Rates of the Ru yaa
annual percentage change
per US dollar. However, immediately after the
introduction of the exchange rate band, the exchange
rate of the rufiyaa per US dollar moved towards the
upper limit of the band and since then it has remained
virtually fixed at MVR15.42 per US dollar.
Mirroring the movements of the US dollar against the
currencies of major trading partners of the Maldives
during May 2017, the rufiyaa appreciated in annual
terms against the pound sterling, the Chinese yuan,
and the Sri Lankan rupee, while it depreciated against
the Indian rupee. Meanwhile, it remained unchanged
against the Singapore dollar and the euro. As for the
Source: Bank of Maldives Plc
monthly changes, the rufiyaa depreciated against the
euro, the Singapore dollar and the Chinese yuan, while
it appreciated against the Indian rupee. Meanwhile, it
remained unchanged against the pound sterling and
the Sri Lankan rupee.
7 Usable Reserves = GIR – Short-term foreign liabilities. This
shows the amount of funds that are readily available for use by the
MMA in the foreign exchange market.
This report is prepared by the Economic Research and Analysis Section of the MMA. For further enquiries please
contact us at 3328028 or e-mail us at [email protected]
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MALDIVES MONETARY AUTHORITY
Boduthakurufaanu Magu
Male’ - 20182
Republic of Maldives
Tel: (960) 330 8679
Fax: (960) 332 3862
Email: [email protected]
Website: www.mma.gov.mv