The Maldives’ official reserves saw a notable decline in September, falling by USD 72 million compared to the previous month, according to the latest data released by the Maldives Monetary Authority (MMA).
As of the end of August, the country’s official reserves stood at USD 443.88 million, reflecting an increase of USD 48.45 million from July. However, by 24th September, the reserves had dropped to USD 371.22 million. The usable reserve, which had increased to USD 61 million in August, has now declined to USD 49 million.
This decline comes as the Maldives settled a USD 25 million coupon payment on a USD 500 million sukuk bond, which is set to mature in 2026. The payment, made on Monday, is part of the country’s efforts to manage its external debt obligations.
In an effort to replenish reserves, the MMA has signed a currency swap agreement with the Reserve Bank of India (RBI). The agreement, formalised on Monday, provides the Maldives with USD 400 million and INR 30 billion, offering the country some breathing room in its foreign exchange reserves.
The Maldives faces significant external debt service obligations, with around USD 600 million due in 2025 and over USD 1 billion in 2026. In light of these financial pressures, international credit rating agencies have expressed concerns. Moody’s downgraded the Maldives’ credit rating from CAA1 to CAA2, while Fitch moved the rating from CCC+ to CC, citing rising risks of default.
Despite these downgrades, the MMA remains confident in the government’s ability to meet its external debt obligations. The central bank points to recent improvements in foreign exchange reserves and ongoing reforms to bolster the country’s financial position. The Maldivian government has also announced plans to refinance USD 500 million (MVR 7.7 billion) of the debt repayment obligations due in 2026. Additionally, amendments to foreign exchange regulations have been introduced to enhance economic stability.
As the Maldives navigates its financial challenges, the focus remains on ensuring the country’s ability to meet its debt obligations while maintaining adequate reserves to support its economy.
