Government Successfully Settles USD 500 Million Sukuk, Signals Stronger Fiscal Stability

The Government of Maldives has successfully settled the USD 500 million Sukuk issued in international financial markets in 2021, disbursing a total of USD 524.68 million including profit payments, in a development expected to strengthen fiscal stability and ease the country’s debt burden.

According to an official statement, the repayment was executed through a combination of the Sovereign Development Fund and national reserves. The total settlement comprises USD 500 million in principal and USD 24.68 million in accumulated profit payments. Authorities stated that the repayment is expected to contribute to a reduction in the national debt-to-GDP ratio.

The Sukuk, issued in 2021, was undertaken to refinance a USD 250 million bond. The government noted that the issuance occurred during a period of heightened global and domestic economic challenges, at relatively high market rates and without a structured repayment mechanism in place. Since assuming office in late 2023, the current administration has prioritised implementing fiscal measures aimed at ensuring debt obligations are met without undermining economic stability.

Central to this effort has been the strengthening of the Sovereign Development Fund, which was established for debt servicing purposes. The government introduced a policy mandating the allocation of foreign currency inflows to the fund, alongside an upward revision of the Airport Development Fee in 2024. Proceeds from the revised fee were directed to the fund while ensuring no additional burden on Maldivian travellers.

As a result, the foreign currency balance of the Sovereign Development Fund has exceeded USD 350 million for the first time. In parallel, the Maldives’ official reserves surpassed USD 1.3 billion at the end of March, marking the highest level recorded to date.

In addition to the Sukuk settlement, the government has concluded negotiations with the Abu Dhabi Fund to roll over a USD 100 million bond maturing this month, helping to manage near-term external financing requirements.

The government stated that its immediate priority remains ensuring the uninterrupted supply of fuel, essential services and key commodities, while supporting continued economic activity. Engagements with international financial institutions are ongoing to secure further financial support aligned with these objectives.

Looking ahead, authorities reaffirmed their commitment to maintaining fiscal and economic stability, with a medium-term focus on steering public finances towards a sustained decline in the debt-to-GDP ratio amid evolving global economic conditions.