The government has settled two major debts totalling nearly USD 1 billion this quarter, easing immediate pressure on the economy amid recent concerns over fiscal stability.
The most substantial payment was the full settlement of a USD 500 million sovereign sukuk, or Islamic bond, which matured this year. Initially issued in 2021 to refinance an earlier bond and cover budget expenditures, the government repaid the principal along with a final USD 25 million coupon payment, for a total of USD 525 million.
The repayment was executed using the nation's own financial reserves and the Sovereign Development Fund, without resorting to new borrowing—a key departure from the previous method of debt refinancing.
Simultaneously, the Maldives Monetary Authority (MMA) has fully repaid a USD 400 million short-term loan facility drawn from the Reserve Bank of India (RBI). This currency swap arrangement was agreed during President Dr Mohamed Muizzu's visit to India in 2024.
In a move underscoring continued financial cooperation, India has subsequently granted a new loan of INR 30 billion (around USD 319 million). The Indian High Commission in Maldives stated this new credit line, provided under favourable terms, is intended to bolster economic development and address financial stability in the island nation.
Beyond these outright repayments, the government has actively pursued and secured concessions on other liabilities through diplomatic negotiation. A USD 100 million debt to the Abu Dhabi Fund, due this month, has been successfully rolled over. Additionally, a planned USD 100 million instalment on a separate USD 150 million State Bank of India loan has been deferred following talks with the Indian government.
These coordinated actions mark a strategic shift in the nation's approach to its significant debt burden, which exceeds a billion dollars this year alone. Where previous administrations often borrowed new money to settle old debts, the current government is prioritising the use of state reserves and negotiating directly with creditors for relief.
This proactive strategy is evidence of growing financial resilience, allowing the Maldives to step back from the brink of default and work toward ensuring long-term fiscal sustainability.