USD 1 billion owed in debt repayment this year

World Bank has said that with the currency swap, the State owes USD 1 billion (MVR 15.42 billion) in debt repayment this year.

In their publication 'Maldives Development Update 2025', World Bank said that the State's Domestic Debt, including Guaranteed Debt, has increased with the currency swap taken from Reserve Bank of India (RBI).

Central bank Maldives Monetary Authority (MMA) took a currency swap of USD 400 million for a six month duration from RBI on October 22, 2024 in an effort to increase reserve.

It has been learned that an agreement has been reached to rollover the facility for an additional three months. Hence, it will have to be repaid in July.

External debt servicing is expected to reach USD 1.1 billion (MVR 17 billion) next year. This will be the highest debt yet in Maldives' history. In 2026, USD 500 million (MVR 7.7 billion) as sukuk payments, and USD 100 million (MVR 1.5 billion) as a private bond placement will need to be repaid in full.

"External and fiscal vulnerabilities, along with increased debt service needs, pose major downside risks to the economic outlook. Further delays in implementing planned fiscal reforms, while contracting new external loans at expensive terms given constrained access to markets, could lead to a fiscal or debt sustainability shock, as the country is already at high risk of debt distress.15 Securing additional external funds to meet external financing needs is also critically important," the report reads.

Meanwhile, the government has now cancelled many of the actions included in the initial Economic Reform Agenda. They have now dropped the plans to introduce targeted subsidies for fuel, electricity, staples, water and sewerage. Additionally, targeting NSPA aid provisions, cancellation of double pension, and targeting senior citizen allowance have also been scrapped.

Budget reviews indicate that this would lead to this year's budget exceeding by MVR 7.7 billion.