Maldives Settles USD 500 Million Sukuk Debt, Strengthens Fiscal Position

The government has fulfilled its obligation on a sovereign sukuk, repaying a total of USD 524.68 million (MVR 8 billion), which is set to go a long way in stabilising the nation’s finances and debt position.

The payment includes the principal amount of USD 500 million and USD 25 million in accrued interest on Islamic bonds issued during the administration of former President Ibrahim Mohamed Solih in 2021. 

The repayment was made using resources from the Sovereign Development Fund (SDF) and the country’s foreign exchange reserves, marking a critical milestone in the current administration’s efforts to restore fiscal discipline. 

The Ministry of Finance and Planning confirmed that this full settlement will lead to a measurable decline in the country’s debt-to-GDP ratio, reinforcing the resilience of the country’s financial sector in the medium to long term.

The sukuk was originally issued to retire a USD 250 million “Sunny Side” bond from the preceding administration, but the incumbent government has since criticised the 2021 transaction as fiscally unsustainable, citing high interest rates and the absence of a structured repayment plan. 

Incumbent President Dr Mohamed Muizzu’s government has prioritised economic recovery and financial transparency, reinstating regular foreign currency deposits into the SDF after a pause during the COVID-19 pandemic. 

To bolster the fund further, the government revised airport development fees in 2024—adjustments carefully calibrated to increase revenue without imposing additional burdens on Maldivian travelers.

As a result of these fiscal measures, the SDF has reached a record high, with foreign currency holdings surpassing USD 350 million for the first time. Alongside this, the government’s total foreign exchange reserves stood at $1.3 billion as of the end of March. 

Despite the successful sukuk repayment, the Ministry of Finance disclosed it is now actively engaging with multilateral financial institutions and development partners to secure additional financial assistance. 

These efforts aim to support ongoing infrastructure projects, diversify the economy, and ensure sustainable debt management.