Minister of Finance and Planning, Moosa Zameer has reiterated that the government will refinance a USD 500 million sovereign sukuk due to mature in April, saying the bond will be rolled over based on state revenue and at a lower interest rate. He made the remarks speaking on a programme on PSM News, amid continued public and international scrutiny over the Maldives’ debt sustainability.
The sukuk, issued in 2021, has been a recurring point of criticism for the current administration. In his recent Presidential Address, President Mohamed Muizzu described the bond as a major source of fiscal strain, arguing that the previous government borrowed USD 500 million at above-market interest rates primarily to refinance a smaller USD 250 million loan taken in 2017. He said the move significantly increased the country’s debt burden.
Concerns over the Maldives’ debt position have also been raised by the International Monetary Fund (IMF), which warned in a November 2022 assessment that the country remained at high risk of debt distress.
He said the current government is pursuing a different fiscal approach. He stressed that, unlike the previous refinancing, the sukuk maturing in April will be refinanced at a lower interest rate and structured in line with government revenue.
He said the administration has strengthened the country’s financial buffers, noting that the Sovereign Development Fund (SDF) now holds more than USD 275 million, funds originally earmarked to settle the 2017 debt and now sufficient to do so. He added that usable foreign exchange reserves stand at about USD 600 million, while gross reserves exceed USD 1.1 billion.
However, the minister said the government does not plan to draw directly on these reserves. Instead, he outlined a refinancing strategy aimed at preserving liquidity while managing debt obligations.
According to the minister, improved fiscal management has strengthened the Maldives’ credit profile, enabling the government to borrow around USD 150 million at comparatively low interest rates as part of the refinancing package. He said this approach would allow the sukuk to be managed without significantly depleting the country’s key financial reserves.